Lufthansa’s Insurers Set Aside $300M For Germanwing Crash Compensation & Faces Unlimited Claims

When I was watching Bloomberg News yesterday, the Germanwings story had already reached a point where compensation and liabilities were discussed.

The Montreal Convention limits the airlines liability in case of fatality at $157,000, if the airline is not held liable. If the airline or any of its employee is liable, the airline can face unlimited claims. The usual compensation is around $1M per passenger, but Lufthansa’s insurers have set aside $300M for the claims arising from this Germanwings crash.

Here’s an excerpt from the Independent (access the full article here):

Lufthansa could have to pay “unlimited” compensation claims to families of the Germanwings disaster victims if the airline is found liable.

Experts claim that the damages limit of around £100,000 will not apply and relatives will be able to demand more in respect of each of the 150 people killed on Tuesday.

To avoid liability, a carrier has to prove that the crash was not due to “negligence or other wrongful act” by its employees, according to Article 21 of the internationally-binding 1999 Montreal Convention.

And here’s from the Guardian (access the full article here)

The co-pilot of the crashed Germanwings passenger plane informed a Lufthansa flight school in 2009 that he had experienced “a serious depressive episode”, the company said on Tuesday, as it confirmed insurers had set aside $300m (£202m) to cover costs.

Earlier on Tuesday, Lufthansa, the parent company of Germanwings, said a note in which Andreas Lubitz mentioned his mental state was found in emails that he had sent to its Arizona flight school when he resumed his training after an interruption. The airline said it provided the documents to prosecutors and declined to make any further comment.

Handelsblatt, the German financial newspaper which first reported the claim, said the normal insurance calculation for plane crashes is $1m (£670,000) per victim, and that the €300m set aside suggested Lufthansa was expecting long and expensive compensation proceedings.

Conclusion

It is going to be a long process for the family members of the victims to reach a solution with the Lufthansa’s insurers.

It is very difficult to argue that the crash wouldn’t have happened due to actions taken by Lufthansa’s employee that opens the gates for unlimited damages instead of the maximum set by the Montreal convention.