An airline can be strictly liable to pay a deceased passenger’s family, even without a hint of proven negligence. That’s just one of three very different insurance layers keeping aviation running.
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Three Layers of Aviation Insurance
Each one covers a different thing, and a different party
Hull Insurance
Covers the physical aircraft itself — body, engines, on-board equipment. Does not cover passengers or cargo.
Covers the physical aircraft itself — body, engines, on-board equipment. Does not cover passengers or cargo.
Passenger Liability
Covers compensation for passenger death or injury, governed by the Montreal Convention, 1999.
Covers compensation for passenger death or injury, governed by the Montreal Convention, 1999.
War-Risk Insurance
Covers losses from terrorism, sabotage, hijacking, and war-related events — bought separately.
Covers losses from terrorism, sabotage, hijacking, and war-related events — bought separately.
Montreal Convention, 1999: ratified by over 130 countries including India. First tier is strict, no-fault liability up to about 128,821 SDR per passenger — the family doesn’t have to prove the airline was at fault.
Timeline
- 1929: The Warsaw Convention sets the first international rules for airline liability, with low, outdated compensation limits.
- 1999: The Montreal Convention is adopted, modernising airline liability rules with a two-tier structure and much higher limits.
- 2003: The Montreal Convention enters into force after enough countries ratify it.
- Since: Over 130 countries, including India, have ratified the Convention, making it the dominant international framework for airline liability today.
🏛️ Must Know
1. Three Kinds of Aviation Insurance
- Hull Insurance Aviation Hull Insurance covers the physical aircraft itself, including the body, engines, and on-board equipment. It does not cover passengers or cargo.
- Passenger Liability Passenger Liability Insurance covers compensation for passenger death or bodily injury during boarding, flight, or landing. It is directly linked to the Montreal Convention, 1999.
- War-Risk War-risk insurance is bought separately, to cover losses from terrorism, sabotage, hijacking, and war-related events.
2. The Montreal Convention’s Strict Liability
- Ratification The Montreal Convention, 1999, has been ratified by over 130 countries, including India.
- No-Fault Tier Its first tier is strict liability: airlines must compensate a deceased or injured passenger’s family up to a set limit, without the family needing to prove fault.
- The Limit This strict-liability limit currently sits at roughly 128,821 SDR (Special Drawing Rights, an IMF unit) per passenger.
🏘️ Good to Know
Beyond the First Tier
- Second Tier Above the strict-liability limit, a second tier applies, where the airline can be liable for further damages, unless it can prove it was not at fault or that a third party caused the harm.
- Cargo and Baggage The Montreal Convention separately caps liability for baggage at about 1,519 SDR per passenger, and for cargo at about 26 SDR per kilogram.
- Predecessor The Montreal Convention replaced the older 1929 Warsaw Convention, which had far lower, outdated compensation limits unsuited to modern air travel.
- India’s Role India is among the more than 130 ratifying states, meaning Montreal Convention rules govern liability on India’s international flights.
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⚡ Great to Know
Why Insurance Is Layered This Way
- Different Risks Each insurance layer covers a genuinely different risk: the aircraft’s own value, human harm to passengers, and deliberate hostile acts. Bundling them into one policy would be far harder to price accurately.
- Why Strict Liability Strict, no-fault liability for the first tier exists because proving an airline’s negligence after a crash can be slow and difficult. Guaranteeing a baseline payout speeds up compensation for grieving families.
- Global Standardisation Before the Montreal Convention, different countries applied wildly different liability rules to the same international flight. A single global framework prevents forum-shopping and gives airlines predictable exposure.
Beyond the answer
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