LAWYERS have begun circling as Malaysia Airlines’ insurer sets aside $110 million to compensate the families of passengers on MH370.

As the search for the missing Boeing 777-200ER continued yesterday in a remote stretch of the southern Indian Ocean about 2500km southwest of Perth, attention has turned to how much the families of the 239 passengers and crew can expect to receive for their loss.

Bradley Hayward, a solicitor at Carney’s Lawyers focusing on aviation, said an international law known as the Montreal Convention guarantees the next of kin up to $175,000 (AUD$191,000).

However, he said there is no limit on the amount of compensation that can be paid if Malaysia Airlines cannot prove it wasn’t at fault.

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“The way it works is there are two tiers of liability,” he said.

“Up to about $175,000 (AUD$191,000), the carrier is strictly liable.

They are liable without having to show they are at fault. If it goes above that amount, the carrier is liable except if it can show it wasn’t negligent,” he said.

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The next of kin of victims of Air France Flight 447, which crashed into the Atlantic Ocean on June 1, 2009 each received US$177,000 (AUD$192,000) in direct compensation from the airline.

Malaysia Airlines has already given US$5000 (AUD$5400) per passenger to their families, and provided hotel, transportation, meals and other expenses for up to five family members since the flight disappeared on March 8.

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However, reports suggest the final compensation bill could run to hundreds of millions of dollars as law suits begin and the airline’s insurers prepare to pay out.

Allianz, the main reinsurer for the missing Malaysia Airlines jet, has already started to pay out on claims relating to its disappearance, according to Reuters.

Although the German insurance giant would not comment on financial details, it has been reported $110 million has been placed in an escrow account and Allianz has agreed to make hardship payments to the relatives of those on the fight.

According to CNN, at least one US-based law suit has also already been brought against Malaysia Airlines and Boeing, the manufacturer of the aircraft.

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Shannon O’Hara, a senior associate specialising in aviation law at Carter Newell, said it is possible more family members may seek compensation from Boeing or from component manufacturers if they are found to have contributed to the accident.

She said the total amount of compensation next of kin ultimately receive from Malaysia Airlines could also differ depending on what country they’re from.

“There are significant differences in the assessment and calculation of damages across the countries affected by the loss of MH370,” she said.

“For example, on the one hand there were passengers on the flight from the United States, which is highly litigious with traditionally high damage awards, and on the other hand, many Chinese and Malaysian passengers with both these countries having more restrained views on damages.”

It comes as Prime Minister Tony Abbott yesterday said the search for the missing Malaysian airliner wasn’t open-ended.

News_Rich_Media: Inmarsat's Senior Vice-President Chris McLaughlin says the southern flight path of MH370 is 'inescapable' according to their data.

“We are just going to keep on looking because we owe it to people to do everything we can to resolve this riddle,” he told the Nine Network.

“It is not absolutely open-ended but it is not something we will lightly abandon.”

Mr Abbott said Australia owed it to the families of those on board, and to an anxious world, to do everything possible to locate some wreckage and “solve the riddle” of what happened to MH370.

Strategic Aviation Solutions chairman Neil Hansford said he expected the search effort in the southern Indian Ocean would cost tens of millions.

“I would think if it goes much more than a week or 10 days, we’ll be up in the tens of millions,” he said.

Central Queensland University accident investigation specialist Geoff Dell said Australia would be liable for its share and that authorities would have to measure the likelihood of success against the mounting expense.

“Under international agreements, people volunteer to help and generally pick up their tabs,” he said.

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“The cost of the search is likely to be spread around countries and agencies.”

Also yesterday, communications experts slammed the airline’s public relations over the incident, describing it as one of the worse examples of crisis management ever seen.

Anthony McClellan of AMC Media said the crisis response had been marked by mixed messages, slow information and “ham-fisted” and damaging treatment of victim’s families.

“My overall view is that it’s one of the worst cases of crisis management communications I’ve ever seen,” Mr McClellan, a public relations consultant who has represented clients including James Ashby, a political staffer who sued former speaker Peter Slipper for sexual harassment, said.

“Basically, they’ve broken all the rules of how to do it.”

News_Rich_Media: Tony Abbott says the families of those on flight MH370 will be welcomed to Australia if they wish to visit.

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