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

The correct answer is Option C (Both 1 and 2), as both statements provide accurate definitions of aviation insurance and legal liability frameworks.

Statement 1 is correct: 'Aviation Hull Insurance' is a specialized policy designed to cover the physical damage or loss of the aircraft itself. It specifically covers the fuselage (body), wings, engines, and on-board instruments or equipment against risks like in-flight incidents, ground collisions, and natural disasters. It operates distinctly from aviation liability insurance, which covers third-party injuries or property damage.

Statement 2 is correct: The Montreal Convention (formally the Convention for the Unification of Certain Rules for International Carriage by Air) was adopted in 1999. India is a signatory to this treaty, having ratified and implemented it via the Carriage by Air (Amendment) Act, 2009. The Convention enforces a two-tier liability regime. Under the first tier, air carriers face "strict liability" up to a set limit (originally 100,000 Special Drawing Rights, periodically adjusted). This means airlines must pay compensation for the death or bodily injury of a passenger, and families are not required to prove negligence or fault by the airline to receive this baseline amount.

Why the other options are wrong:

• Option A is incorrect because it fails to recognize the strict liability mandate under the 1999 Montreal Convention.
• Option B is incorrect because it wrongly dismisses the accurate definition of Aviation Hull Insurance.
• Option D is incorrect because both statements are factually true.

Takeaway: Remember the distinction: Hull Insurance protects the physical "shell" and operational assets of the aircraft, while the Montreal Convention protects the people by ensuring strict, fault-free baseline compensation for passengers and their families.