The Air India Express Boeing 737, which overshot the Kozhikode table-top runway on landing at 7.41 pm on Friday, was insured for $50 million. Globally, airlines buy insurance policies to cover asset damage, customer liability, and third-party claims.

Air India’s fleet is insured for around $10 billion and the airline has a liability cover of $750 million. The policy is underwritten by four public sector insurance companies. This covers all 170 planes of Air India, Air India Express, and Alliance Air. The policy was renewed in April, with an annual premium of $30 million, said sources.

“The claim settlement will depend on the hull value and the liability. The prices will harden in the international market. At the same time, carriers are facing liquidity crises. The reinsurer’s price, too, will move up. The insurers may also have to push up rates, as prices are driven by reinsurers,” said an executive of a public sector insurer.

“Indian Insurers and GIC Re have full protection against aviation risks, which will limit our liability. Therefore, it’s not a worry as far as GIC is concerned. The maximum net loss to GIC will not be above $8.5 million. Any amount beyond the above-mentioned figure will be recovered from foreign reinsurers. It’s still early days for a total loss assessment,” said a GIC Re official.

Rates in aviation risk will harden for sure, said a GIC official.

While the asset insurance policy secures an airline from loss to its aircraft, engine or spares, the liability cover protects it from third-party claims.

While Air India Express is expected to get the full insured amount for the hull loss, it will have to pay compensation to the kin of the deceased and injured, according to applicable laws. The compensation will be paid from its liability cover.

In a statement, Air India Express said it is adequately insured and will pay compensation in accordance with the applicable laws at the appropriate juncture.