Thursday, January 24, 2013

Air India might not get payout from insurer on Boeing loss

Air India might have to rely solely on Boeing for compensation for the loss caused due to its 787 Dreamliners being grounded, as the insurance cover it has taken does not cover financial losses due to glitches occurring on account of technical and other factors.
"In this case, Air India will not be awarded any compensation as the planes have been grounded for other reasons and not due to fire, accident or blast. Only such damages are covered by the policy," said a senior official from New India Assurance, which had bagged a contract to insure the entire fleet of Air India.
In traditional fleet insurance policies, only damages caused by major accidents and natural catastrophe are covered. Hence, if an airline's fleet if grounded due to regulatory issues, the insurance company is not liable to pay.
Air India had grounded all six planes in its Dreamliner fleet after the US Federal Aviation Administration issued a global advisory to airlines that used the 50-odd Dreamliner aircraft around the world. Air India would resume Dreamliner services only when the Directorate General of Civil Aviation clears this.
But certain policies do offer a discount in premiums, if a flight is grounded for a long period. Private general insurer ICICI Lombard General Insurance for example, under its aviation hull insurance policy has a provision for concession in premium if the aircraft is grounded.
24/01/13 Aneesh Phadnis/Business Standard