Air India Crash May Trigger Over Rs 1,500 Cr Insurance Claims: Here’s The Breakdown

Last Updated:June 13, 2025, 20:20 IST

India became a signatory to the Montreal Convention of 1999 in 2009. Consequently, specific rules will govern insurance claims for air disasters and damage

Remains of the Air India plane that crashed moments after taking off from the Ahmedabad airport on June 12. (Image: PTI)

Thursday’s Ahmedabad Air India crash could lead to one of the largest aviation insurance claims in recent times. India became a signatory to the Montreal Convention of 1999 in 2009. Consequently, specific rules will govern insurance claims for air disasters and damage. Sources indicate the AI 171 crash will trigger an insurance response exceeding Rs 1,500 crore.

With over 240 lives lost of passengers and crew and the aircraft destroyed, the insurance response involves both domestic and international markets. This also includes the damage to the nearby MBBS hostel.

According to government sources, the following are the insurance highlights: the aviation policy is led by Tata AIG General Insurance, supported by Indian co-insurers such as GIC Re, United India, Oriental Insurance, and ICICI. Around 95% of the risk is reinsured with major global players, including AIG, AXA XL, and other reinsurers in the London and Bermuda markets. The Boeing 787-8 aircraft, declared a total loss, is insured for an estimated Rs 650–700 crore, based on its age. Under the Montreal Convention, families of deceased passengers are entitled to approximately Rs 1 crore each, which has already been announced. With over 240 fatalities, this could result in payouts exceeding Rs 240 crore.

The total projected insurance payout will likely make this one of the most expensive aviation insurance claims. The combined hull and liability exposures may exceed Rs 1,000-1,500 crore, depending on final settlements and legal claims. Furthermore, Air India’s fleet-wide aviation cover amounts to Rs 8,000-10,000 crore, with an estimated annual premium of around Rs 250 crore.

This event will likely have a significant market impact, potentially hardening the global aviation insurance market, especially for wide-body aircraft operators in India. The government expects the insurance claims to be processed expeditiously.

Pallavi Ghosh

Pallavi Ghosh has covered politics and Parliament for 15 years, and has reported extensively on Congress, UPA-I and UPA-II, and has now included the Finance Ministry and Niti Aayog in her reportage. She has als…Read More

Pallavi Ghosh has covered politics and Parliament for 15 years, and has reported extensively on Congress, UPA-I and UPA-II, and has now included the Finance Ministry and Niti Aayog in her reportage. She has als… Read More

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