A few minutes after taking off from Ahmedabad airport for London, Air India’s Boeing 787-8 Dreamliner plane crashed and hit a medical college hostel. In this horrific accident, 241 out of 242 passengers on board the plane died, while a British citizen miraculously survived. This is being described as the worst plane crash of the last decade.

After the accident, the Tata Group announced that the families of the deceased will be given an ex gratia of Rs 1 crore. Also, the Tata Group will bear the entire cost of treatment of the only surviving passenger, and also those injured in the building where the plane crashed. Now, another question that comes to mind is what types of insurance coverages are typically covered by an airline in such accidents.

Evaa Saiwal, Business Head – Liability, Cyber and Specialty Risk at PolicyBazaar, explains various aspects of insurance coverage in such airline accidents.

Commercial airlines generally purchase comprehensive aviation insurance programs, which typically include: Hull insurance, passenger liability insurance, third-party legal liability, cargo liability and crew personal accident.

Also read: How did Air India flight crash? Flaps to landing gear, experts weigh in on key questions

Difference between hull insurance and liability insurance

Hull insurance covers physical damage to the aircraft itself — whether on the ground, during taxiing or in flight. Liability insurance protects the airline from legal claims arising from bodily injury, death, or property damage caused to third parties, including passengers, airport personnel, or people and property on the ground.

While hull insurance pays out to the airline, liability insurance compensates the affected individuals or their families, often in accordance with international conventions like the Montreal Convention, Saiwal noted.

Airlines are also required to make advance payments within 15–30 days for immediate needs in fatal accidents, without admitting liability; while Long tail liabilities might happen anytime between 6 months to even 3 years, she added.

Talking about insurance payouts by insurers in such cases, Meet Kapadia, Head of Travel Insurance at Policybazaar, said, “If a passenger unfortunately loses their life in an accident like this, the accidental death benefit under travel insurance helps the affected family. It ensures the family receives a lump sum payout, often ranging from Rs 10 to Rs 15 lakh if the sum insured is around $150,000, helping them navigate the difficult time financially.”

Such policies also cover emergency medical evacuation, which can be critical if a passenger needs to be airlifted or transferred to a specialised medical facility for urgent treatment.

In the unfortunate event of a fatality, the insurance also takes care of repatriation of mortal remains, ensuring the deceased can be brought home with dignity, without placing the logistical or financial burden on the family, he added.

Also read: LIC, Bajaj Allianz expedite claim settlement for Air India plane crash victims

This ill-fated Air India plane was insured by Tata AIG, while other companies such as New India Assurance, National Insurance, United India, Oriental Insurance and ICICI Lombard provided partial insurance coverage.

The entire structure of the plane’s insurance was based on a global reinsurance arrangement, which extends to international companies through the London market. Indian insurers held only less than 10% of the total risk.

How much will be the insurance claim?

The total amount of insurance claims from Indian insurers and global reinsurers in this Air India Boeing 787 Dreamliner plane crash can go up to $120 to $150 million (about Rs 1,000 to Rs 1,200 crore), reports suggest. Out of this hull loss of the plane is about $80 million.

Passenger and third-party compensation

This claim can be even higher due to high-networth passengers. According to some estimates, the compensation related to the passenger can go up to $100 million.

Also read: Why did Ahmedabad-London Air India flight crash? Black box holds all answers – here’s what it is

On what basis is the compensation given?

India is a signatory to the Montreal Convention 1999, under which the families of passengers in aviation accidents get internationally recognized compensation. According to this convention, even if the negligence of the airline is not proved for the accident, a basic amount has to be paid to the relatives of the passengers, which can be more than Rs 1.3 crore at current rates.

If the fault or negligence of the airline is proved, then this compensation can increase even more. Also, there is insurance coverage for damage caused to third parties such as hostels or nearby citizens.

Insurance sector experts believe that this accident will be the biggest insurance claims incident in Indian aviation history.