Whenever a plane leaves the runway, it carries not only people but also an immense financial responsibility. The aviation industry functions in an environment where even the smallest error or technical issue can have serious consequences. Because of this, it is deemed one of the highest-risk sectors across the world. In recent months, India has seen similar incidents, reminding us just how high those stakes really are.
In June 2025, an aircraft crashed seconds after taking off. More than 240 people lost their lives in the disaster. The total insurance claim from the tragedy has been estimated at nearly USD 475 million, roughly INR 39,000 to 40,000 crore. The amount covers passenger and crew liabilities, damage on the ground, and the complete loss of the aircraft. Interestingly, just two months before the crash, Air India had increased the insurance cover for that particular plane from INR 750 crore to INR 850 crore after replacing its engine. That adjustment, made as a routine precaution, turned out to be an unexpectedly critical decision. What is important to note here is that India has seen many other high-value aviation insurance cases before.
These events expose the true financial scale of air disasters. Apart from the emotional and operational consequences, the monetary exposure in aviation is enormous. Therefore, aviation insurance is not just a regulation to abide by. It serves as the lifeline for airlines.
What is Aviation Insurance?
Aviation insurance in India is a type of coverage for airlines. It covers against risks related to aircraft operations, including the following:
- Damage to the aircraft
- Damage to the passengers
- Third-party liabilities
- Damage or loss of Baggage or cargo
- Other operational risks
Most importantly, regulations under air carrier liability laws and international aviation conventions require operators to have adequate coverage in place. So, most flight operators buy both hull and liability coverage, and many choose to add optional covers for specific risks depending on their operations and routes.
Also Read: Common Mistakes to Avoid When Buying Travel Insurance Online
What are Aviation Insurance Inclusions?
Let's take a look at the following pointers to learn what is likely to be covered under an aviation insurance policy in India:
Hull cover: It covers damage to the aircraft itself from accidents, crashes, fire, hail, or other perils while airborne, on the runway, taxiing, or in hangars.
- Liability to passengers: It is likely to compensate for injuries or the death of a passenger(s) during the flight or while boarding/disembarking.
- Third-party liability: It pays for damage to persons, property, or structures on the ground (if an aircraft crashes, overshoots the runway, damages buildings, etc.).
- Baggage and cargo liability: This coverage protects against loss or damage to baggage and cargo carried on board.
- Pilot’s liability: Some policies are likely to cover incidents where a pilot is detained or loses their license due to a covered accident.
What are the Exclusions and Limits under Aviation Insurance?
Aviation plans in India do not cover everything. Typical exclusions or limitations may include the following:
- War, terrorism, sabotage.
- Illegal operations.
- Flying outside permitted routes.
- Damage caused by negligence.
- Failure to maintain the aircraft properly.
- Damage due to wear and tear and gradual deterioration.
- Losses as a result of design flaws, unless the manufacturer’s liability is covered.
- Losses that occur outside the policy period.
- Incidents that happen outside the geographical scope agreed upon.
How are Premiums Determined?
Several factors affect the cost of aviation insurance in India:
- The type of aircraft (commercial jet, turboprop, helicopter, private plane)
- The age, model, and maintenance history
- The value of the aircraft (hull insured value)
- The use (passenger, cargo, charter).
- Routes flown, flight hours/year, and exposure to adverse weather or difficult terrains.
- Liability limits chosen for passengers, third parties, baggage, and cargo.
- Experience of pilots, safety record, condition of aviation maintenance, and regulatory compliance.
- Whether additional coverages (war risk, terrorism, pilot loss) are included.
- Reinsurance arrangements (a substantial portion of the risk in Indian aviation insurance is ceded to global reinsurers, allowing domestic insurers to manage large-scale losses more effectively).
How to Buy Aviation Insurance in India?
Here are the things to keep in mind when considering getting aviation insurance:
- Assess your plane's exposure: Knowing the type of aircraft, its usage, routes, flight hours, and maintenance is crucial. Also, make sure to understand the especially relevant risks (weather, terrain, air traffic, etc.).
- Decide on the extent of coverage: How much hull value do you need insured? What liability limits (passengers, third parties, cargo)? What add-ons do you need (war risk, grounding, pilot liability, etc.)?
- Compare insurance companies: You will find specialist aviation insurance providers in the market who understand aviation risks better. They are likely to provide tailored quotes. Get in touch with them.
- Check terms and exclusions carefully: What is excluded? What are deductibles? Geographical limits? Waiting or notice periods? How is the aircraft valuation done in case of loss?
- Negotiate reinsurance and retention: If you want a higher deductible or self-insured retention, you are likely to have a lower premium but higher out-of-pocket expense should something go wrong.
- Ensure regulatory compliance: Regulatory factors can largely affect the scope of insurance coverage. Ensure that maintenance, pilot training, and operational safety meet the protocols.
- Review your policy regularly: Things like the age of aircraft, its usage, accident history, route changes, and regulatory changes are likely to evolve. Always make it a point to review your insurance policy regularly to make sure there are no gaps in coverage.
Conclusion
Aviation insurance in India is super-important for every airliner. It is an industry where the stakes are exceptionally high and a single error can lead to grave consequences. Recent incidents underline the possible financial losses and the human impact of aviation accidents. Therefore, full coverage is essential for every airline operator. It helps maintain continuous operations and enables quick recovery if something unexpected happens.
FAQs about Aviation Insurance
How to cover helicopters?
Yes, there are insurance companies in the market that sell aviation insurance for helicopters and smaller aircraft. The premiums are likely to differ depending on risk factors like routes, weather, maintenance, and the pilot’s experience.
How quickly are claims from big aviation accidents settled?
For very large incidents, regulatory authorities often direct insurers to fast-track payouts, especially liability (for passengers, third parties). However, the full settlement may take many months, depending on the complexity.
Are insurance premiums likely to rise due to past accidents?
Yes, after large disasters, insurance and reinsurance service providers re-analyze your risk and often increase the premiums. Besides premiums, their policy terms, documentation, regulations, and the overall process may get stricter.
Do Indian insurers cover liabilities under international treaties?
Yes, they cover liabilities under international treaties, as it is a standard practice in the aviation industry. For airlines operating on international routes, this coverage is mandatory.
Can claims be rejected?
Yes, just like any other insurance policy, claims filed under aviation insurance may be denied if you fail to maintain the aircraft properly, furnish incorrect information, or engage in unauthorized operations.
