The airline has pledged an ex gratia payment of ₹1 crore to the families of each deceased passenger.
In addition to this, multiple layers of insurance—including aviation, life, and personal accident—are expected to provide additional compensation and assistance to the families of the victims.
Aviation insurance: Coverage details of Air India’s policy
Air India, consistent with other major international airlines, maintains a comprehensive fleet-level aviation insurance policy.
As per Sajja Praveen Chowdary, Director, Policybazaar for Business, “Commercial airlines usually acquire an extensive aviation insurance program that encompasses hull insurance, passenger liability insurance, third-party legal liability, cargo liability, and crew personal accident cover.”
Hitesh Girotra, Vice President, Prudent Insurance Brokers, states that commercial airlines typically obtain the following essential covers:
- Hull all risk: Coverage for physical damage to the aircraft (excluding wear and tear, mechanical failures, or nuclear risks).
- Hull War Risk: Protection against hijacking, sabotage, and terrorism.
- Combined single liability (CSL): A global mandatory cover that includes:
- Passenger liability (in accordance with the Montreal Convention)
- Baggage and cargo liability
- Third-party liability (covering injuries or damages on the ground)
- Excess war liability (AVN 52E): Protection for claims related to war, similar to those following events like 9/11.
- Hull deductible buyback: Alleviates the deductible burden on airlines for claims, ensuring even minor claims are acceptable.
“The actual value of the Boeing 787-8 Dreamliner is typically far less than its listed price,” noted Hari Radhakrishnan, an aviation insurance expert and IBAI member. “While the list price might be around $250 million, the insured value may be closer to $115 million, depending on depreciation and market dynamics.”
“Passenger liability for international flights often exceeds $500 million due to global standards such as the Montreal Convention and EU aviation safety regulations,” he continued.
What compensation will families receive?
As stipulated by the Montreal Convention, which governs international aviation liability, the airline is obligated to provide compensation without requiring families to establish fault.
This international treaty enforces that airlines are strictly liable for confirmed damages up to 113,100 SDRs (approximately ₹1.26 crore at current exchange rates), without requiring claimants to prove negligence.
“Liability insurance guarantees that affected individuals or their families receive compensation according to international standards,” added Chowdary.
Further compensation may be due if negligence is proven or through civil claims.
The EU regulation, requiring a minimum of 250,000 SDRs (approximately ₹2.8 crore) in insurance coverage per passenger, applies to all carriers operating to or from Europe.
Additionally:
Air India’s ₹1 crore ex gratia payment offers immediate assistance.
Credit card air personal accident (PA) coverage may provide an extra ₹1 crore to ₹3 crore if tickets were purchased using qualifying cards.
“Most Indian credit cards provide such coverage, but it only activates if the air ticket was bought with that card,” noted Chowdary.
It is also important to mention that the ₹1 crore compensation announced by the Tata Group is supplementary to the insurance amounts families are legally entitled to.
Travel insurance and emergency assistance
Many passengers may possess individual travel insurance, which includes accidental death, medical evacuation, and repatriation of remains.
“In cases of accidental death, beneficiaries typically receive a lump sum payout—often ranging from ₹10-15 lakh for a $150,000 policy,” explained Meet Kapadia, Head of Travel Insurance at Policybazaar.
Kapadia added: “Most insurers implement expedited procedures in such circumstances. Dedicated helplines, quicker claims, and logistical support are activated to assist families and medical teams.”
Risk sharing: The role of global reinsurers
“The aviation insurance market operates on a global level,” stated Narendra Bharindwal, President of the Insurance Brokers Association of India (IBAI). “Air India’s fleet insurance is syndicated and reinsured in international markets such as London and New York.”
“No single insurer holds the entire risk. Coverage is distributed among global reinsurers, with one often retaining 1.5% to 2% of the risk. A leading reinsurer typically keeps 10-15%,” Bharindwal clarified.
These international reinsurers may include companies like Allianz, AIG, and Lloyd’s syndicates, and might offload portions of the risk through retrocession, meaning they reinsure themselves.
Life insurers mobilize emergency claims teams
In response to the tragedy, Bajaj Allianz Life Insurance has set up a dedicated claims desk to assist affected customers.
The company stated:
“We have eased documentation requirements. If a death certificate is unavailable, a hospital or municipal confirmation will be sufficient. Claims will be prioritized for settlement.”
LIC of India has also announced adjustments to ease the burdens faced by the claimants of LIC policies.
“In place of death certificates, any official evidence of the policyholder’s death due to the plane crash or any compensation awarded by central/state government or airline authorities will be accepted as proof of death,” LIC stated.
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