Possibility of pilot error not to impact compensation for Air India Dreamliner crash victims

Indian Express

12-07-2025

Compensation for the victims of the Air India 787-8 Dreamliner crash in Ahmedabad a month ago will not be affected by the possibility of pilot error, according to industry experts. Both the airline and the families of those who died in the crash are generally entitled to compensation, even when pilot error is involved.
In fact, the compensation amount could potentially increase if negligence by maintenance staff or technicians is established, sources said. The exact compensation and legal proceedings vary depending on the jurisdiction and whether the flight was domestic or international.
Airlines typically maintain liability insurance that covers passengers or their families in the event of injury or death, regardless of whether the cause is pilot error, mechanical failure, or other factors like pilot suicide.
An insurance official explained that pilot error generally does not influence passenger compensation, which is largely governed by international or national aviation laws and the airline's own policies. Under the Montreal Convention, applicable to most international flights, airlines are strictly liable for damages up to a certain threshold –currently around SDR 128,821 or approximately Rs 1.50 crore per passenger — and can be held liable for higher amounts if negligence, including pilot error, is proven.
Even if a crash happens due to suicide by the pilot, compensation won't be impacted. If an insurer can establish gross negligence or deliberate concealment by the airline such as knowingly permitting a mentally unfit pilot to operate a flight, it may challenge or reduce the payout to the airline. However, compensation to passengers or their families is generally safeguarded and not affected in such circumstances.
Chetan Kashyap, Head- Aviation and Speciality Lines, Prudent Insurance Brokers, said, 'a Hull 'all-risks' policy is a policy that covers all risks with 'named' exclusions. Pilot error, if any, is not an exclusion to it and hence insurance payout remains unchanged. Even machinery failure or system failure is not excluded under the policy wherein the only difference is right of subrogation which gets passed on to insurers in such case against the OEM (original equipment manufacturer) but overall insurance payout remains unaffected. Also, in this case passengers or third-party claimants can also claim damages from OEM for failure of parts.'
According to Hari Radhakrishnan, Expert with the Insurance Brokers Association of India (IBAI), Air India will get compensation for the loss of aircraft and passenger liability even if there was pilot error. 'Too early to say this, but even if it was pilot suicide and deliberately crashed, the insurance would pay. Insurers paid claims for Germanwings Flight 9525 crash in 2015 that killed 150 people, where the copilot locked out the captain from the cockpit and flew the plane into a mountain,' Radhakrishnan said.
For domestic flights within India, compensation is governed by national regulations such as the Carriage by Air Act and guidelines set by the Directorate General of Civil Aviation (DGCA), which ensure that passengers or their families are compensated regardless of who is at fault. In cases where foreign nationals are among the deceased, families have the option to file claims in jurisdictions such as the country of the carrier, the place where the ticket was purchased, or the home country of the victim. Since nationals from Britain, Canada, and Portugal were among the victims, legal proceedings in international courts are likely.
For Air India, both hull and liability insurance are expected to cover the damages. These policies typically include coverage for the loss of the aircraft (hull loss), passenger liability, and third-party liability. Pilot error is also covered under standard aviation insurance policies unless gross negligence or intentional misconduct is proven, which remains rare and difficult to establish. If the pilot is perished in the crash, his/ her family could still receive compensation from the airline's group life insurance and any personal accident insurance policies, unless there was a violation of policy terms such as flying under the influence, said a source.
The Tata Group, which owns Air India, has announced an ex gratia compensation of Rs 1 crore to the next of kin of all passengers who died in the crash. Families of people who died on the ground will also be eligible for this Rs 1 crore compensation, and the company has stated it will cover medical expenses for those who were injured.
According to insurance industry sources, the crash is expected to result in total claims of around Rs 4,000 crore (approximately $470 million), making it one of the most significant insurance events involving an aircraft accident. The aircraft hull alone is estimated to cost insurers and reinsurers about $80 million, with the engines valued at an additional $45 million. Liability claims related to passenger deaths are expected to reach approximately $350 million, though the final amount may vary depending on the number and nature of claims filed and the jurisdictions involved.