IRDAI publishes guidelines on standard domestic travel insurance policy

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The Insurance Regulatory and Development Authority of India (IRDAI) has released a framework for a standard domestic travel insurance product called “Bharat Yatra Suraksha”.

The policy will cover the costs of hospitalization, death, total or partial permanent disability due to an accident, for travel by taxi, bus, train, boat and plane in the country. The insurance regulator has also advised “all general and health insurers to strive to offer this product from July 1”.

The product consists of five plans and coverage is both benefit and indemnity based.

The standard product will cover hospital costs due to an accident where the sum insured will be in the range of Rs1 lakh to Rs10 lakh. It will provide accidental death coverage with an insured sum ranging from Rs1 lakh to Rs1 crore for permanent total disability, permanent partial disability, repatriation of the remains and automatic extension of travel. Optional coverages include coverage for missed flight connections, loss of checked baggage, trip delays beyond three hours, and cancellations.

There will be no restriction on the minimum and maximum age of entry. However, the applicant must be at least 18 years old.

“Although there are several travel insurance products in India, each product is distinct and the insurer public may have difficulty choosing an appropriate product. Therefore, a standard travel product is designed with uniform coverage characteristics, to make available the most common requirements of a common passenger, ”IRDAI said.

In accordance with the directives issued, plan A will cover travel by taxi or bus up to 100 km from the place of origin, plan B for travel by taxi or bus beyond 100 km from the place of origin, plan C for travel by train (only for tickets), plan D for travel by plane and plan E for travel involving one or more modes of public transport such as taxi, bus, train, the boat or the plane.

The product can be offered on both an individual and group basis. When offered as family coverage, the insurance sum chosen applies to each family member separately.

Since the proposed product will be issued on a trip and trip basis, insureds will not be able to renew the policy, but an extension on payment of the premium has been authorized. There will only be one premium payment, which must be paid in advance. There is no initial waiting period.

While there are many products with different coverage, add-ons, they are structured differently. Standardization of the travel insurance product will provide the policyholder with assurance as to how the insurance policy is administered, interpreted, the claims process and the payment of claims. It would also be easier for a buyer to decide what product offerings are available based on brand, price, and service experience.

There will be no co-payments as part of the standard domestic travel product, but insurers have been allowed to put in deductibles. Co-payment refers to an arrangement in which the policyholder will have to pay a part (fixed percentage) of the medical costs on his own and the insurance company will pay the remaining amount.

Major policy exclusions include pre-existing illness or disease, injury or medical condition; self-inflicted injury, attempted suicide; liability resulting from accidents due to travel on two-wheeled vehicles, also assumed by the insured on his own motor vehicle. It would also not be applicable to cover liability resulting from a trip where the insured person drives the public carrier.

With its common features of coverage, Bharat Yatra Suraksha seeks to make it convenient for those who cannot choose from the currently available travel policies as well as to provide coverage to protect against unknown contingent events.

IRDAI had previously launched similar standard products for term life insurance, health insurance and home insurance. The main motive for all of these standard covers is to simplify the wording of the policy document and the characteristics of the cover, as well as the exclusions explained with little scope for misinterpretation. However, the pricing of these standard products has been left to the insurers.


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