While the search for the ill-fated MH370 continues in the Indian Ocean, the aviation insurance industry considers a plane destroyed if it has not been located within 2 days.
The airplane operating the MH370 flights was insured for hull and liability by the German insurance company called Allianz and re-insured by a number of smaller insurers. Malaysia Airlines has already been compensated $110 million by Allianz for the plane.
There is an interesting piece on CNBC’s website about this that you can access here.
The Montreal Convention that deals with airline compensation only requires $176,000 payment per deceased passenger. According to an airline insurance analyst, the airline is likely to pay out between $500 to $750 million in total compensation to the families and should have liability insurance for around $1 billion.
The relatives can sue the airline, the aircraft maker, the manufacturer of the engines etc.
The relatives that are able to sue the airline outside of Malaysia or China are likely to receive far higher compensation than those that are not. American courts would likely award compensation payment of $8 to $10 million per passenger where a court in China or Malaysia would likely settle for less than a million.
Here’s the very interesting part. What determines where the airline can be sued?
– Where the airline is based
– It’s main place of business
– Where the ticket was purchased
– The destination of the flight
– Primary residence of the plaintiff
It seems that the case with this Malaysia Airlines flight MH370 will drag on for a long time. In the past week, there were already petition filed for discovery against both Boeing and Malaysia Airlines in the US.
Relatives of those passengers that can press their cases in the US courts are far likely to reach an amicable settlement with Malaysia Airlines and/or the insurer of the aircraft and maybe Boeing as well if it was technical failure brought the plane down.
Remember. Where you bought the ticket can make a huge difference if something goes terribly wrong with a flight