Chennai: After the Jet Airways suspended its flying operations, insurance might not come for the rescue of both the company and the customers who had booked their tickets. Neither the company can claim loss due to suspension of business operations nor the customer claim for flight cancellation.
Usually airline companies buy aviation insurance policies which typically cover damage to aircrafts, passenger liability, hijacking, war perils etc. “In this case the airline company has suspended its operations due to debt issues and loss of business is not covered under the policy,’ said G Srinivasan, former Chairman of New India Assurance.
Oriental Insurance is the leading insurer of Jet Airways and New India Insurance has some time been a co-insurer.
“Insurance is triggered when there are accidents and mishaps and not business failures,” added Sanjay Datta, Chief- Underwriting, Claims & Reinsurance, ICICI Lombard General Insurance Company. However, the company can get a refund on the laid up cover portion of the total premium, he added.
“If say, Jet Airways had paid a premium of Rs 100 crore, part of it would be for the laid up cover. The period for which the aircrafts are grounded, the premium for that period would be refunded. But it would be a very small portion of this Rs 100 crore,’ said Srinivasan.
In order to protect a company or its project from a possible business loss, a niche cover is available these days. But none of the aviation companies usually purchase this cover.
As far as customers are concerned, the flight booking charges will not be refunded under the travel insurance policy. Travel insurance covers all unforeseeable events occurring during a travel and this largely covers medical emergencies. “But the cover kicks off when the travel begins. In this case, the journey itself has not started and hence the customer will not be able to make a claim for cancellation of flight,” said Dutta.
Further, the cancellation has been informed well in advance, added Srinivasan.