Aviation insurance
Line of business covering the aircraft itself and liability to passengers and third parties, under the Warsaw and Montreal conventions.
On June 11, 2025, the London Commercial Court held that the leased aircraft left in Russia in 2022 were lost under the war policies, not the all risks policies. Aviation insurance comes down to two splits: the aircraft versus the harm it can cause, and ordinary perils versus war. Hull insurance covers the aircraft itself against total loss or physical damage, in flight, on the ground or in maintenance. Liability cover responds to passengers, baggage and cargo, then to third parties on the ground. An airline program therefore stacks four covers: hull all risks, hull war bought back after the AVN 48B exclusion, a combined single limit for passengers and third parties, often above one billion dollars per event for a major carrier, and spares. Airports, ground handlers and manufacturers buy their own liability, manufacturers under products liability. On the legal side, the 1929 Warsaw Convention set the first limits on airline liability, and the 1999 Montreal Convention replaced it for international carriage. Under Montreal the carrier is strictly liable up to 151,880 SDRs per passenger for death or bodily injury, a figure raised from 128,821 on December 28, 2024 at ICAO's five-year review; above that, the carrier escapes liability only by proving it was not at fault. Required limits are therefore very high. A wide-body aircraft is more than any single insurer can carry, so the market works through coinsurance and national pools, with Lloyd's at the center. Drones are a fast-growing segment with liability questions of their own.
Example, a 180-seat narrowbody lost on an international flight, agreed hull value 45 million euros (example assumptions). The hull policy pays the agreed value, with no argument over market value. For passengers, the Montreal Convention sets two tiers per passenger (Article 21): up to 151,880 SDRs the carrier pays and has no defense; above that, it pays unless it proves it was not at fault. The first tier, for 180 passengers, is 180 × 151,880 = 27.34 million SDRs, about 33 million euros at 1.2 euros per SDR (example assumption): a floor, not a ceiling, and the real cost depends on where families can sue, and Article 33 extends jurisdiction to the passenger's residence. The point that hurts is political: clause AVN 48B removes war, hijacking, seizure and confiscation by a state from the hull and liability policies, and these are bought back in a separate market (hull war, AVN 52 for third-party liability). Dated case: for the leased aircraft left in Russia in 2022, the London Commercial Court held on June 11, 2025 ([2025] EWHC 1430 (Comm)) that the loss fell under the war risks policies, not the all risks policies; permission to appeal was granted on March 31, 2026.
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