Correct Option
The correct option is Both 1 and 2.
[as per provisional answerkey]
Explanation
Aviation insurance is a specialized field of insurance that provides coverage for the specific risks associated with the operation of aircraft and the liabilities arising from aviation activities. It is governed by both domestic regulations and international conventions to ensure standardized compensation and risk mitigation.
- Statement 1 is Correct: Aviation Hull Insurance is a specific type of insurance policy that provides coverage for physical damage to the aircraft itself. This includes the airframe (the body), the engines, and all permanently attached equipment on board. It protects the owner or operator against financial loss resulting from accidents, collisions, or other physical perils while the aircraft is in flight, taxiing, or on the ground.
- Statement 2 is Correct: The Montreal Convention (1999) established a modernized and uniform legal framework for international air carrier liability. Under this convention, a two-tier liability system was introduced. For the first tier (up to a specified limit of Special Drawing Rights), the carrier is subject to strict liability. This means the airline is liable for damages in the event of death or bodily injury to a passenger without the claimant needing to prove negligence or fault on the part of the airline. India is a signatory to this convention, and its provisions are incorporated into the Carriage by Air Act.
Key Takeaway: Aviation Hull Insurance covers the physical asset (aircraft), while the Montreal Convention (1999) mandates strict liability for airlines regarding passenger death or injury, ensuring compensation without the burden of proving fault up to certain limits.