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Ahmedabad Air India crash: All about insurance safety net and beyond

The death of 241 passengers on-board London-bound Air India flight -- which crashed in Ahmedabad on Thursday afternoon -- has trained the spotlight on passenger rights, insurance liabilities, and what families can claim after such disasters. We spoke to four experts to break it down. Airline liability and Montreal Convention Under the Montreal Convention, airlines are strictly liable up to 151,880 Special Drawing Rights (SDRs), an international asset class created by the International Monetary Fund, which is about Rs 1.7 crore, without needing to prove fault, says Sajja Praveen Chowdary, director at Policybazaar for business. Beyond this, compensation can be claimed only if the airline was negligent. However, this applies only to international flights between signatory nations, clarifies Sudhish Ramteke, associate director at Anand Rathi Insurance Brokers. In India, domestic flights follow the Carriage by Air Act, 1972, with similar provisions but typically lower compensation and more legal hurdles. Vaibhav Kathju, chief executive officer of Inka Insurance, adds that for domestic travel, the liability is capped at 100,000 SDRs about Rs 1.1 crore. However, payments can be delayed if fault is in dispute, and actual disbursal may depend on negotiations or court proceedings. Travel Insurance: A crucial extra layer of protection Most standard Indian travel insurance policies do provide accidental death benefits, which are paid in addition to airline compensation, says Ramteke. These fixed lump-sum payouts can range from Rs 10 lakh to Rs 1 crore, depending on the policy. According to Manish Kumar Goyal, chairman and managing director at Finkeda, such policies must be purchased voluntarily, often at the time of booking. Exclusions may include travel under the influence of alcohol, invalid tickets, or pre-existing medical conditions. Kathju highlights that insurance payouts are faster and more straightforward than airline compensation, which often involves legal proof and timelines. Policies also usually cover medical evacuation, repatriation of remains, and emergency hospitalization. Employer's group covers: What happens if death occurs on duty? If the victim was on official duty, corporate insurance can provide crucial support. Most employers offer Group Term Life Insurance (GTLI) and Group Personal Accident (GPA) policies. 'These can range from 2 times to 5 times of annual salary or a fixed sum insured,' says Kathju. Government employees may receive additional benefits through schemes like CGEGIS. But coverage varies widely across private companies, and small businesses may offer minimal or no protection. Goyal notes that accidental death on duty may also attract double indemnity payouts, depending on the policy. Personal term insurance: Claim all you're eligible for Personal term life insurance is completely independent of any other insurance, be it group cover, travel insurance, or airline compensation. Chowdary from Policybazaar says that there is no overlap and families can claim from all sources. Goyal adds that all payouts under Section 10(10D) of the Income Tax Act are tax-free in India, provided policies follow IRDA norms. Airline payouts, being compensatory, are also not taxable. However, travel insurance payouts under some clauses might have different tax implications, so consulting a tax advisor is advised. Credit card coverage: Often overlooked Premium Indian credit cards such as HDFC Infinia, SBI Elite, or Axis Magnus offer complimentary air accident insurance, if the ticket was booked using the card, says Kathju. The cover may include sums up to Rs 1 crore, but only for commercial flights, and excludes events outside the aircraft. Documents like a death certificate, boarding pass, and ticket copy are needed for claim processing. Cardholders should ensure the policy is activated, as some insurers require registration via the bank portal.