UPSC Prelims 2026 · Question 61 of 96
UPSC Prelims 2026 question on Aviation Insurance
- ExamUPSC CSE
- Year2026
- PaperGeneral Studies Paper I
- SubjectIndian Economy
- TopicImportant Economic Concepts
- DifficultyHard
- TypeStatement
Which of the following statements about insurance in aviation sector is/are correct?
1. 'Aviation Hull Insurance' covers the physical aircraft, including the body, engine, and on-board equipment.
2. Under the Montreal Convention, adopted in 1999 by over 130 countries, including India, airlines are strictly liable to pay compensation to the family/nominee of every deceased passenger without requiring the family to prove fault.
Select the answer using the code given below:
Show answer
Answer: C. Both 1 and 2
Verdict
Both statements are correct, so the answer is Option (c).
Analysis
Aviation insurance offers broad protection against risks arising from aircraft operations, including coverage for physical damage as well as different types of liabilities. The Montreal Convention, 1999 is an international treaty designed to standardize rules governing international air transport, with particular emphasis on passenger rights and airline liability. Under this convention, airlines are subject to strict liability up to a prescribed limit measured in Special Drawing Rights (SDRs), ensuring that families receive initial compensation without the need for prolonged legal proceedings to establish negligence.
Statement by statement
Statement 1 is correct: 'Aviation Hull Insurance' covers the physical aircraft, including the fuselage, engine, and onboard equipment. This insurance type protects the aircraft's physical components against loss or damage while flying, parked, or during ground movement and taxiing operations.
Statement 2 is correct: Under the Montreal Convention, adopted in 1999 by more than 130 countries including India, airlines are strictly liable to compensate the family or nominee of a deceased passenger without requiring proof of fault. The convention introduces a strict liability mechanism up to a specified compensation threshold, ensuring that airlines remain responsible for providing basic compensation regardless of fault.