With over 240 deaths, the Air India crash may lead to hundreds of millions in compensation under the Montreal Convention of 1999, which sets a strict liability cap of around $171,000 per passenger.
The Boeing 787 Dreamliner, registered as VT-ABN and delivered in 2013, crashed near the Ahmedabad airport, reportedly resulting in a high number of fatalities and damage to properties on the ground.
The aircraft was insured under Air India’s $20 billion aviation insurance program, which includes both hull and liability coverage.
Passenger liability is governed by international aviation treaties, with the Montreal Convention requiring compensation of up to 128,821 Special Drawing Rights (SDRs) per passenger – equivalent to approximately $171,000. Claims related to passenger deaths, as well as possible third-party losses on the ground, are expected to comprise the largest share of insurance payouts.
Amit Agarwal, CEO and MD of Howden India, explained that the Dreamliner was insured for about $115 million in 2021 under the aviation hull all-risk section, which includes the value of the aircraft and its spares. He said that whether the damage was partial or total, coverage would be based on the value declared by the airline.
"The liability section, which is likely the most significant component of the loss, could amount to millions of dollars," Agarwal said.
According to Hitesh Girotra of Prudent Insurance Brokers, the aircraft’s current hull value could be around $75-80 million. Girotra said the operator’s liability would depend on several factors, including passenger nationality and the extent of third-party property damage or loss of civilian life near the crash site.
Air India’s policy involves both domestic and global insurers. Tata AIG, a group company, underwrites a portion of the risk along with other Indian insurers.
Reinsurance is arranged through an international consortium led by AIG, with participation from New India Assurance and GIC Re. Following the crash, shares of New India Assurance and GIC Re declined by 4% and 3%, respectively.
Narendra Bharindwal, president of the Insurance Brokers Association of India, said commercial aircraft like the Boeing 787 are typically insured for hull values between $200-300 million, with liability coverage for international operations often exceeding $500 million.
The final claim amount will be determined based on findings from the black box and ongoing regulatory investigations.
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