Air India crash likely to trigger India’s biggest aviation insurance payout

The total liability could range from £166m to £220m, according to estimates

The deadly Air India crash outside Ahmedabad earlier this month could result in the most expensive aviation insurance claim in India’s history, insurance experts say.

Investigators continue to probe what caused the Boeing 787-8 Dreamliner to plummet into a crowded residential complex into crash in Ahmedabad just 33 seconds after take-off on Thursday 12 June.

Of the 242 people onboard flight AI171 to London Gatwick, 241 were killed, including 53 British nationals. The flight crashed into a hostel complex at Byramjee Jeejeebhoy Medical College, killing several students and residents on the ground. Only one passenger – a British-Indian man seated in 11A – survived.

The total liability could range from $211m to $280m (approximately £166m to £220m), according to estimates reported by Press Trust of India. This includes the full hull value of the aircraft, compensation for victims’ families under international aviation law, and payouts for third-party property damage and loss of life on the ground.

While the airlines’ losses are expected to be covered under aviation “all-risk” insurance, the payouts for passengers are governed by the Montreal Convention, to which India is a signatory.

Under this framework, the minimum compensation per deceased passenger could reach up to 128,821 Special Drawing Rights – about $171,000 or £134,000 – though the actual amount may vary depending on nationality, legal claims, and additional liabilities.

The Tata Group has already announced interim compensation of ₹1 crore (around £85,000) for the families of the deceased. In addition to this, Air India announced that it would pay 2.5 million rupees (£21,000) in an interim payment to the victims’ families and the sole survivor, British national Vishwash Kumar Ramesh.

Investigative officials stand at the site of Air India Boeing 787 which crashed on Thursday (Getty)

Given the large number of international passengers, including from the UK, Portugal and Canada, global reinsurers are expected to absorb much of the financial impact.

India’s state-run Life Insurance Corporation (LIC) also announced it would relax documentation requirements for victims’ families filing death claims, accepting official government records or compensation proof instead of death certificates to ease the process.

The full cost of the crash – in terms of lives, property and future safety measures – is still being assessed. Investigations by Indian and international authorities are ongoing, with aviation officials, engineers and anti-terror teams continuing their examination of the crash site, aircraft wreckage and “black box” flight recorders.

The crash was the world’s worst commercial aviation disaster in over a decade and the first fatal crash involving the Boeing 787.

India’s Directorate General of Civil Aviation has ordered fresh checks on all Boeing 787s flying in the country, while a joint investigation is underway involving Indian authorities, US experts, and a team from Britain’s Air Accidents Investigation Branch (AAIB).

The airline, now owned by Tata Group, has not commented publicly on the extent of its insurance coverage.