Aviation products liability

On October 29, 2018, Lion Air flight 610 went into the Java Sea; on March 10, 2019, Ethiopian Airlines flight 302 crashed near Addis Ababa. Two Boeing 737 MAX aircraft, 346 dead, and the same flight control system at issue. Victims' families sued the manufacturer, mostly in federal court in Chicago, and most claims were resolved by settlement. That is the ground covered by aviation products liability insurance. It covers airframers, engine makers, equipment suppliers and maintenance firms for bodily injury and property damage caused by a defect in design, manufacture or instructions. The victim often has no contract with the manufacturer, and claims also come from the airline or its insurers, which paid passengers under the Montreal Convention and then turn against it. The market writes it on an annual aggregate limit, unlike airline policies, which are capped per occurrence: two accidents of one type in the same year use up the same limit. Large manufacturers buy several billion dollars of capacity in London and continental Europe, and small suppliers quickly run into the issue of chain subcontracting, since the final manufacturer demands cover against another firm's part. Grounding cover, which pays the manufacturer's liability to operators when an authority grounds a whole type because of a defect, is scarce, low-limited and expensive. The weakness of that line showed in 2019 and 2020: compensation paid to airlines for the 737 MAX fell mainly on the manufacturer's balance sheet, under its contractual commitments more than under its policy. Not to be confused with a fleet grounding seen from the airline's side, where it suffers business interruption without physical damage.