Legalese Omission May Cost Insurers Millions In Malaysian Air Crashes

The aviation insurance industry is reeling after the second major Malaysian Airlines disaster within months, largely because the airline’s $2.25 billion overall liability policy is missing common phrasing that would limit what insurers have to pay for search and rescue expenses. Insurers could be on the hook for hundreds of billions if the Malaysian and Australian governments seek reimbursement for the considerable expense of searching for Flight 370, which vanished March 8. At the same time, war risk insurers did not prohibit commercial flights from passing over Ukraine, where that country is engaged in conflict with Russian separatists. The U.S. has accused the separatists there of shooting down Malaysian Airlines Flight 17 on July 17.