NewsApp (Free)

Read news as it happens
Download NewsApp

Available on  

Rediff News  All News  » Business » MH-370 crash: Insurance cos are liable to pay the full sum

MH-370 crash: Insurance cos are liable to pay the full sum

March 25, 2014 09:59 IST

Aircraft that are lost and their debris aren't found are also covered under the 'disappearance' clause in an aviation insurance policy

  • Insurance companies are liable to pay the full sum assured under such a policy. However, local laws apply in case a particular country is not part of global pacts for compensation for air-related accidents
  • Once the government concerned gives an official statement on the disappearance, the claims processing begins within 48 hours

  • Life and property losses are to be paid in full. Number of lives lost and survivors (if any) is based on the official list provided by the airline

  • Most countries follow the Montreal Convention of 1999, which covers norms with respect to carriage of passengers by air

  • Article 50 of the Montreal Convention says governments shall ask their carriers to maintain adequate insurance covering liability under this convention

  • More than 100 countries, including China, India and Malaysia, are party to this convention, which has provisions for loss of life and baggage

  • With respect to the air carrier liability, the Montreal Convention has established a 'two-tier' system of liability - a carrier has a liability for up to 113,100 special drawing rights (Rs 10.58 crore, or $174,020) in case of passenger death

  • The carrier might be liable to pay damages exceeding 113,100 SDRs, unless it proves the fault wasn't its, but was that of a third party

  • With respect to loss or damage to baggage, the convention limits the air carrier's liability to 1,131 SDRs (Rs 1.05 crore or $1,741.74) per passenger, irrespective of baggage weight
BS Reporter