UPSC Prelims 2026 Question:

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

1. 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:

Answer: 3 

Explanation:  

‘Aviation Hull Insurance’ covers the physical aircraft, including the fuselage/body, engines, avionics, and  onboard equipment.  

• It protects against physical loss or damage to the aircraft arising from accidents, collisions, fire,  weather-related damage, and other aviation risks. So, statement 1 is correct  
• The Montreal Convention, 1999, adopted by over 130 countries under the framework of the  International Civil Aviation Organization, established a modern liability regime for international air  travel. It introduced a two-tier liability system, under which airlines are subject to strict liability up to  a prescribed compensation limit for passenger death or bodily injury. This means the victim’s family or  nominee does not need to prove negligence or fault of the airline for compensation up to that threshold.  So, statement 2 is correct  
• India is a party to the Montreal Convention, and the convention applies to international carriage by air  involving member countries.  

Therefore, option (3) is the correct answer.