Air India Plane Crash: Why Your Travel Insurance Won’t Get Costlier After A Plane Crash

The Air India tragedy that led to the deaths of 240 passengers has shocked the entire nation. We have seen the financial implications of such a tragedy. Following any aviation tragedy, the foremost priority is ensuring that affected families receive timely and transparent support. Under the Montreal Convention of 1999, an international treaty to which India is a signatory, the airline is strictly liable for death or injury up to 151,880 Special Drawing Rights (SDR), which amounts to approximately Rs 1.78 crore per passenger at today’s exchange rates. This compensation is payable regardless of fault, offering meaningful financial protection to the victims’ next of kin.

“In addition to this no-fault compensation, the convention allows for higher claims if negligence is proven, and mandates interim relief for families. It also governs coverage for baggage loss and flight delays, making it one of the most comprehensive passenger protection frameworks in international air travel today,” says Mathur.

With Boeing now facing increased underwriting scrutiny, reinsurance markets are expected to harden globally. “This leads to a sharp uptick in premiums for carriers operating Boeing fleets, including Indian airlines like SpiceJet and Air India. “As insurers recalibrate risk, the cost of aviation cover is set to rise substantially. This spike in premiums will inevitably trickle down to passengers through higher ticket prices or reduced service buffers, making air travel marginally more expensive,” says Mathur.

Travel Insurance Premiums Unlikely To Go Up 

But will travel insurance premiums go up? However, travel insurance premiums depend mainly on how sick passengers fall on a trip, especially abroad. They do not have much bearing on plane crashes because that event may be catastrophic, but it is not an event that occurs frequently. Even in the immediate aftermath of a crash, travel insurance premiums are unlikely to go up. So, the impact on travel insurance premiums, if any, is likely to be small. However, other geopolitical events like wars and disturbances may have an effect on premiums over time. 

So, while airline insurance premiums may go up after an air crash like the recent Air India crash, individual travel insurance costs are likely to remain the same. Thanks to global compensation conventions, affected families receive compensation while routine travel insurance premiums remain largely unaffected.