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The Insurance Times
Airline operators also have insurable interest on AVIATION LAW
the life of the members of the crew who are their
employees. The Carriage by Air Act, 1972 (INDIA)
1. This Act was passed in 1972 and came into
Indemnity force in 19th December, 1972.
The principle of indemnity is applied in respect of
loss of or damage to the aircraft. In case of partial 2. As stated in the preamble to the Act, its
loss of an aircraft hull the indemnity is provided by object as if "to give effect to the Convention for the
the cost of repairs but wear and tear or unification of certain rules relating to international
deterioration is excluded. carriage by air signed at Warsaw on the 12th day
of October, 1929 and to the said Convention as by
It is also the practice to issue 'Agreed Value' the Hague Protocol on the 28th day of September,
policies. This agreed value is paid in the event of 1955 and to make provision for applying the rules
total loss. These fixed value policies are, in fact, contained in the said Convention in its original
contracts of indemnity with the difference that the form and in the amended form (subject to
measure of indemnity is agreed at the inception of exceptions, adaptations and modifications) to
the contract and not at the time when loss non-international carriage by air and for matters
occurs. connected therewith".
The principle of indemnity is also applied to legal 3. The provisions of the Warsaw Convention
liability covers. 1929 are incorporated in the rules in the First
Schedule of the Act.
Scope of Aviation Insurance
The risks insurable under aviation policies are 4. The provisions of the amended Convention,
mainly the following: i.e. the Hague Protocol, 1955 are incorporated in
i. Loss of or damage to the Hulls of the aircraft' the rules in the Second Schedule of the Act.
ii. Legal liabilities towards passengers and their
An Introduction to Aviation Insurance
baggage;
iii. Legal liabilities towards owners of cargo Aviation Insurance constitutes a miniscule
percentage of the Indian insurance market
carried; accounting for 1.7% of the premium underwritten
iv. Legal liabilities in respect of carriage of mail; by all the non life insurance companies. Globally
v. Legal liabilities towards persons and property the premiums have been falling since 2001 due to
reduction in the number of accidents. But major
on the ground; losses incurred by airlines globally in 2007,
vi. a) Personal Accident of aircrew around $1.8 billion have been a setback to the
aviation insurance sector. The crash of a TAM
b) Personal accident of passengers; Airbus A320 in Sao Paulo, Brazil in July and a
Kenya Airways B737 near Douala, Cameroon in
vii. Loss of licence of aircrew on medical May, alone are expected to cost airline insurers
grounds; almost $700million. With the cost of claims
soaring, the capacity reducing, the market
viii. Legal liability of airport owners and operators; becoming hard , the rates of premium are
ix. Satellite Insurance; expected to rise.
x. Products legal liability of manufacturers;
xi. Loss of use of aircraft following damage
Note : The last two types of risks are not generally The Indian aviation industry is moving at a fast
insured in India. pace growing at a rate of 18 per cent annually and
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