Air India Crash Insurance Payout Set to Be India’s Costliest – Experts Decode the Figures

The recent Air India Flight AI 171 crash in Ahmedabad not only marks one of the deadliest aviation disasters in Indian history but is also likely to result in the costliest aviation insurance payout the country has ever seen. As investigations continue into the cause of the crash, insurance and aviation experts are analyzing the enormous financial repercussions associated with such a large-scale tragedy.

The Boeing 787 Dreamliner, which crashed shortly after takeoff on June 12, 2025, was carrying 242 passengers and crew members. Of them, 241 lost their lives. The aircraft also struck a building housing medical students and staff, resulting in further fatalities and property damage. With the loss of lives, damage to infrastructure, and total destruction of the aircraft, the insurance liability is projected to cross ₹1,000 crore, or over $120 million. Experts believe this could become the most expensive aviation insurance payout in Indian aviation history.

According to industry professionals, the insurance settlement in such cases is divided into multiple components: hull insurance (covering the aircraft itself), passenger liability (compensation for victims), third-party liability (for damages to properties and individuals on the ground), and potential litigation costs. The hull value of a Boeing 787 Dreamliner is estimated to be between $100 and $150 million. In addition to the value of the aircraft, there is significant compensation owed to the families of the deceased passengers and crew.

The amount of compensation each passenger's family may receive varies depending on international treaties and airline policies. India is a signatory to the Montreal Convention, under which airlines are liable to pay compensation of approximately ₹1.2 crore (around $150,000) per passenger, without requiring proof of fault. If negligence is proven, the compensation amount can increase significantly. Legal action, especially from foreign nationals' families, could further escalate insurance claims.

Apart from human loss, the destruction of the hostel building and the tragic deaths of students and staff inside add a third-party dimension to the insurance claim. Property damage, loss of life on the ground, and business interruption claims from the affected institution will all be covered under third-party liability insurance, which can make up a substantial portion of the final payout.

Aviation insurers and reinsurers are now preparing for the financial implications. As per industry trends, most large aircraft like the Boeing 787 are covered by global reinsurance pools, which help distribute the risk among multiple insurers worldwide. Lloyd’s of London and other international reinsurance firms are likely to be involved in settling claims related to the crash.