Experts in the industry predict that the total losses could soar to ₹1,000 crore, encompassing claims for aircraft damage, passenger compensation, and third-party liabilities.
“A significant incident like this could lead to losses reaching several hundred crores,” noted Amit Agarwal, MD & CEO of Howden India. “It is likely to affect aviation insurance rates in the future.”
Hull and liability: Coverage under aviation insurance
Air India has secured its fleet under a global aviation insurance program that generally includes two primary elements: hull all-risk insurance and liability insurance.
Hull all-risk insurance compensates for physical loss or damage to the aircraft, including its parts and equipment.
“For a Dreamliner, the insured value can vary between $211 million and $280 million, depending on the aircraft’s age and configuration,” Agarwal stated. “The aircraft involved (VT-ABN), a 2013 model, was reportedly insured for about $115 million in 2021.”
Conversely, airline liability insurance covers passengers, crew, and third parties—such as the victims at the hostel.
As per Narendra Bharindwal, President of the Insurance Brokers Association of India (IBAI), “No single insurer holds the entire risk. These extensive aviation policies are often syndicated and reinsured globally—typically across markets in London, New York, and others. A single reinsurer might carry only 1.5% of the risk, while a leading reinsurer may retain 10–15%.”
Compensation for passengers
Compensation for the families of passengers
will adhere to the Montreal Convention of 1999, adopted by India in 2009. This international regulation mandates that airlines provide minimum compensation in the event of death or injury, without requiring families to demonstrate fault.
However, the final amount could depend on the airline’s insurance coverage and any legal claims made.
The nationality of the passengers plays a role in determining jurisdiction and liability limits, with those onboard including 169 Indian nationals, 53 British nationals, 1 Canadian, and 7 Portuguese nationals.
According to Hitesh Girotra, VP (Aviation & Specialty Lines) at Prudent Insurance Brokers, “The Montreal Convention establishes a minimum, but depending on court jurisdiction and claims from families, ultimate compensation may be significantly higher.”
Beyond airline coverage: Third-party and personal insurance
In addition to the passengers, compensation will also be required for victims affected on the ground, such as those residing in the BJ Medical College hostel. This falls under the airline’s third-party liability coverage.
Passengers may also have individual travel insurance or coverage through credit card-linked air accident policies, which typically provide extra lump sums in the event of accidental death.
Sector impact and increasing costs
The general aviation insurance premium market in India is estimated at approximately ₹900 crore annually. While global insurers typically handle large claims like this, such incidents can influence premiums and underwriting practices in the subsequent years.
“Even if the immediate losses are absorbed by global reinsurers, the Indian market will likely experience shifts in aviation cover pricing and risk evaluation,” Agarwal remarked.
–With inputs from PTI and Reuters
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