MH17; war risk exclusion not invoked by Dutch insurers

US intelligence officials have indicated that pro-Russian rebels accidently shot down flight MH17 over eastern Ukraine. If this is indeed the case, then the relatives of the passengers are entitled to compensation by the airline and there will be no war risk exclusion under Dutch insurance policies, as has been declared by the Dutch Association of insurers.

The Montreal Convention requires that Malaysia Airlines make an initial payment of approximately EUR 113,100 for every passenger, regardless of whether it is at fault. It can limit its liability to this sum in case it succeeds in the proof that such damage was not due to the negligence or other wrongful act or omission of the carrier or its servants or agents. Malaysia Airlines could very well wind up owing a lot more money, especially given the precarious details pertaining to Flight MH17.

For instance, the International Civil Aviation Organization (ICAO) had issued warnings in June 2014 urging airlines to avoid Ukrainian airspace. However, according to ABC News Australia, Malaysian Prime Minister Najib Razak denies this, claiming instead that the airspace Flight MH17 attempted to cross had specifically been deemed safe by ICAO. His premise is that the flight was basically flying above the restricted area.

Friday 14 July 2014 the Dutch Association of Insurers released to the public that Dutch insurers will not invoke the war risk clause, whatever the cause of the downing of the plane.

Although the cause of the plane crash is not fixed, it is believed by insurers that an antiaircraft missile was fired with the cooperation or at least the knowledge of pro-Russian separatists in eastern Ukraine. According to the Association of Insurers this would mean to the letter of the law that coverage would have been excluded “as the case of (large) acts of war or terrorism.” Given the press release all Dutch insurers will nevertheless pay out.

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