Which of the following statements about insurance in aviation sector is/are correct?

1. Aviation Hull Insurance covers physical damage caused by war, hijacking and hostile action.
2. Under the Montreal Convention, airlines are liable to pay compensation to passengers irrespective of negligence.

Select the answer using the code given below:

1. 1 only
2. 2 only
3. Both 1 and 2
4. Neither 1 nor 2

Explanation

Statement 1 is correct

• Aviation Hull Insurance covers the physical aircraft, including its body, engines, and on-board equipment.

Statement 2 is correct

• Under the Montreal Convention (1999), ratified by over 130 countries including India, airlines are strictly liable to pay compensation to families of deceased passengers regardless of fault.

Answer: (c) Both 1 and 2; Difficulty Level: Medium