Which of the following statements about insurance in aviation sector is/are correct ?
- 'Aviation Hull Insurance' covers the physical aircraft, including the body, engine, and on-board equipment.
- Under the Montreal Convention, adopted in 1999 by over 130 countries, including India, airlines are strictly liable to pay compensation to the family/nominee of every deceased passenger without requiring the family to prove fault.
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Correct Answer: Option C
Detailed Explanation:
Statement 1 — Correct. Aviation Hull Insurance covers the physical aircraft itself — body (fuselage), wings, engines, and on-board equipment. Think of it as insurance for the machine, not the people. (Different from Liability Insurance, which covers passenger injury/third-party damage claims.)
Statement 2 — Correct. The Montreal Convention (1999) — signed by 130+ countries including India — says:
- For death/injury claims up to a certain limit, the airline is automatically liable
- The family does NOT need to prove the airline was at fault
- This is called "strict liability" — compensation is guaranteed up to that limit, no blame-game needed
Memory Trick:
- Hull Insurance = Insurance for the aircraft body (the machine)
- Montreal Convention = Automatic compensation for passengers (no need to prove fault) up to a limit
Question 1 of 1 Mutual Funds and Insurance
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