Safe Landing

The Assurance Of Travel Insurance

Have you lost your passport, fallen ill, got mugged or even hijacked while abroad? Has your baggage been misplaced, trip cancelled or flight delayed leaving you stranded and penniless? No problem, travel insurance is there to come to your rescue, says Mahesh Tharani

Anup Poddar, president - sales, BeePee Group, a Mumbai-based textiles company, travels so frequently that he is no stranger to crises while on the move. Among his numerous misadventures, he lists one instance when his baggage was lost by an airline, numerous instances of baggages delayed plus an anecdote of a time when he found himself in Europe along with a friend who had lost his passport. But he claims to be never unduly worried in any of these situations. Ask him why and the answer comes in two words - 'travel insurance'.

Says Poddar, "I was returning to India from Italy when the airline lost my baggage. My bag was valued at Rs 1 lakh of which Rs 20,000 was reimbursed by Alitalia who was responsible for the loss while New India Assurance, the travel insurance company, paid me Rs 70,000. In other instances where travel insurance came to the rescue, my baggage had been delayed due to which I had to buy new clothes. The insurance companies reimbursed me as much as US$ 100 a day."

Poddar continues in the same vein about the time when his friend lost his passport. "It was in Europe. Since we had a yearly corporate policy, we got instant help in the form of US$ 200 which took care of all our expenditures including transport to embassy etc. Though there was a loss of time everything became easier because of the support," he says. Poddar's is not an isolated experience. Travel insurance comes to the rescue in a host of contingencies.

What Is It And Why Is It Necessary

Plainly defined, travel insurance is a type of insurance taken out by holidaymakers or travellers on business to cover them in case of emergencies.

"Planning for overseas travel is not only planning for the expected, but also anticipating the unexpected. Overseas travellers are exposed to several risks during the course of their travel. Being in an unknown territory and subject to different laws at different times compounds the risks. A travel insurance policy provides protection to the traveller against the wide range of risks and perils, all under one single policy document," says A Sen Sarma, executive vice-president - retail, IFFCO-Tokio General Insurance Ltd.

Such risks could range from theft to medical expenses. As V Ganesan, manager - technical, National Insurance Company, says, "Considering the prohibitive costs for medical treatment abroad, it is always better to have an insurance cover and even if it isn't a prerequisite for a few countries it is only to the advantage of the traveller to be insured."

Another reason why you would want to take travel insurance is because it's compulsory while visiting many countries. "For example, travel insurance is a must for availing a Schengen visa while travelling to Europe," says Vikram Kapoor, business development manager, HDFC Chubb General Insurance Co Ltd.

The common benefits offered by Indian insurers include:

• Accidental Death: Covers the insured in case of loss of life in an accident.
• Permanent Disablement: Pays a benefit if the insured person is permanently disabled in an accident.
• Emergency Medical Expenses: Reimburses the insured for expenses incurred for an accident or illness while travelling overseas only.
• Emergency Medical Expenses (accident only): Reimburses the insured for expenses incurred for an accident while travelling in India only.
• Emergency Travel Benefits: Includes emergency medical transport, medical/body repatriation, location and transfer of medication and/or medical by-products, emergency travel expenses for a family member and an insured person's child, or a replacement colleague.
• Baggage Delay: Provides an amount for emergency purchases.
  
• Baggage Loss: Pays for replacement of lost baggage, personal documents or personal effects.
• Flight Delay: Pays a benefit for each hour that the insured's flight is delayed.
• Hijacking: Pays a benefit for every six hours the insured is held on a hijacked common carrier.
• Trip Cancellation: Pays travel and/or accommodation expenses if the insured's trip is cancelled.
• Trip Interruption: Pays travel and/or accommodation expenses if the insured's trip is interrupted.
• Frequent Flyer Interruption - Emergency Travel: Pays for the costs of a first class train fare or economy class air fare to return home upon interruption of travel arrangements made with a recognised frequent flyer programme.
• Contingency Travel Benefit: Pays for reimbursement of coffin expenses, legal assistance following an automobile accident, emergency hotel accommodation and/or emergency hotel extension on occurrence of a contingency covered in the policy.
• Assistance Provider Services: Helps with emergency medical transport or repatriation, related services, as well as advice on pre-departure information such as visa requirements.

Tips For Choosing A Policy

"Any insurance policy is a piece of paper until there is an emergency," says Baldev Singh, assistant vice president - travel services, Tata AIG General Insurance Company.

But when the eventuality does occur the piece of paper becomes vital and choosing a right policy from a right insurer can make all the difference. Here are a few tips for buying a travel insurance policy:

• Mode of claim settlement

Choose the insurance company, which settles mostly through direct payment to the hospitals rather than reimbursing the expenses. This can be a serious problem if one does not have the money to pay the advance before taking the treatment.

One also needs to check with the insurer whether the claims will be settled abroad in US dollars or settlement will be on reimbursement basis only in Indian rupees. Some insurance companies settle claims in Indian rupees.

• Check for the international help line

Check if there is any help line/helpdesk, which can be contacted in case of an emergency.

• Can the policy be extended while you are abroad?

Check beforehand if your policy can be extended further since you may have to stay abroad for longer than planned.

• Understand the exclusions (what is not covered) carefully

One needs to read the fine print to realise the exclusions to the policy. All insurance companies have to specify their terms of exclusions leaving the onus on the purchaser of the policy to ensure that they know under which circumstances the policy would not cover any exigencies.

• Deductibles

Deductible is the amount of the loss which the insured has to bear in each and every claim. Insurance companies shall be liable only when the amount of loss exceeds the ‘deductible’ amount. For example, a policy with Rs 100 deductible would mean that policyholder has to bear Rs 100 of each and every claim under the policy. You may choose a higher deductible to lower your premium. But it is not advisable to opt for a higher deductible to reduce the premium outgo.

One should make an informed decision by giving due consideration to policy coverage, service offered by insurer and such other aspects rather than basing the decision solely on the premium outgo. The deductions will be clearly noted in any quotation released or any policy issued and it is again the onus of the purchaser to know the amount deductible for each policy.

• Amount of Premium

No doubt premium is one of the important things to be considered but it would not be right to base your decision only on premium outgo. It would be prudent to make a decision after giving due consideration to aspects such as the policy coverage, service/claim support offered by the insurer and policy exclusions.

These charges depend on the age of the traveller, destination, duration of the trip and can differ from company to company.

FOREIGN INTEREST For persons travelling to the U.S.A or Canada, it may be worth their while to surf the Internet and buy a suitable policy online. The main advantage is that one can show the policy to the hospital administration and take the treatment without paying any advance. Normally, the hospital calls the insurance company using a toll free number of the company and gets prior approval. Foreign insurers do provide online travel insurance covers for people outside their home country, e.g.: Speciality Risk International. Benefits offered by these companies are more or less similar to those offered by Indian insurers. However these companies have certain advantages such as: These polices can be extended up to a maximum of three years. One can opt for a hazardous sports cover by paying additional premium. Travelling in domestic airlines of respective countries is covered. A few policies offer benefits even in case of trip cancellation or trip interruption.

Policy Matters

In India, the general insurance companies are the ones who offer travel insurance packages. There are in all 12 companies - eight private and four in the public sector.

Prior to liberalisation of the insurance sector, the four public sector general insurance companies - National Insurance Company, New India Assurance Company, Oriental Insurance Company and United India Assurance Company - offered Overseas Mediclaim Policy or OMP. The opening up of the insurance industry found most Indian private companies joining hands with foreign general insurance companies to offer the range of products available across the world. While TATA AIG has come up with product known as Travel Guard, Bajaj Allianz has a Travel Companion, Royal Sundaram has called it Travel Shield. The names may be different but an cursory look into these policies reveals that coverage offered is more or less the same. A premium of Rs 1045 would get you a US$ 100,000 policy for a 1-14 day travel itinerary provided you are below forty years. Above that age the policy might increase by about Rs 400 to Rs 700.

Says Baldev Singh, "Most policies amongst the private players are the same, the only difference being the service that are provided after an emergency occurs." The policies among the private companies available for Indian business travellers can be broken up into three types essentially:

• A single trip cover /a daily rated plan: Covers an individual only for a single trip
• A yearly plan: Most companies offer an individual a yearly plan for up to 180 days.
• A corporate insurance plan: A number of employees are covered under this kind of scheme.
  

All companies have a domestic and international travel policy with the international policies being of two types:

• Travel policies including the US and Canada: The premium for this policy is much more expensive because of the higher cost of medication in these countries.
• Travel policies excluding Canada and US: Could be bought even on a yearly basis as long as the individual would not be visiting US or Canada. The premiums are less expensive for this policy.