Air India’s Boeing 787 aircraft, which crashed in Ahmedabad on Thursday, was insured for around $ 120 million, aviation industry sources said.
Airlines take insurance policies to cover against damage to an aircraft from accident, incident or wars. There is a separate cover for passenger and third party liabilities and that would get triggered following the crash.
Air India had finalised a $20-billion insurance cover for its fleet and this came into effect from April. Tata AIG is the lead insurer, taking a significant portion of the risk. Indian public sector insurance firms and ICICI Lombard have a smaller share of sum insured. The entire risk has been underwritten by London-based reinsurers.
Air India did not immediately respond to an email query.
As a first step, insurance surveyors will visit the site and assess the damage. They will also gather details from the airline to help underwriters understand what caused the crash. While the airline is expected to receive full claims as per the hull loss policy, passengers on board the aircraft will be paid compensation as per the provisions of Montreal Convention. This sets minimum limits for a compensation that an airline is supposed to pay to injured and the kin of the deceased.
“While the hull component is easy to ascertain, it is too early to ascertain the overall liability (passengers and third party) on the operator because of this crash,” said Hitesh Girotra, vice-president (aviation and specialty lines), Prudent Insurance Brokers.