More than 12 million Indians travelled abroad in 2010 and the number is much higher than it was, say five years ago. The numbers are expected to rise significantly over the next two-three years. The reason for this boom in outward travel is that Indians now frequently travel abroad for vacations, business trips or to pursue higher studies. But, with the increase in travel, there is also an enhanced need for travel insurance to cover risks associated with travelling, such as costs of medical treatment in case of an emergency and baggage loss, among others.

“The travel insurance market is growing between 8-10 per cent on international travel and 15-20 per cent on domestic travel,” said Gaurav Garg, managing director and chief executive officer, Tata AIG General Insurance. Looking at the expanding scope of travel insurance in the near future, Berkshireinsurance.com, owned by Warren Buffett, has started selling Bajaj Allianz’s travel insurance plans. Earlier, it was only offering motor insurance.

While the idea of going abroad to get a glimpse of and experience new, varied cultures or vacationing in picturesque locations is exciting, it also poses many risks. Most important is medical treatment costs in case of an emergency. “In a bid to minimise the exposure of dangers of travelling into an alien land, people opt for travel insurance. The primary benefit of travel insurance is the knowledge that should some mishap or accidents occur while you are abroad, you won’t worry or get stressed about organising funds for treatment,” said Neelesh Garg, executive director of ICICI Lombard General Insurance Company.

The premium for travel insurance policy depends on the country one is visiting. “Travel insurance for the US and Canada is costlier than the rest of the world, for the simple reason that the cost of medical treatment in the US and Canada is comparatively higher vis-à-vis countries like UK, Australia, West Asia and southeast Asian nations,” said Karan Chopra, head of retail business at HDFC Ergo General Insurance. The premium for travel insurance policy depends on the cost of medical treatment in such countries, along with increase in price of medicines.

Awareness about the need to buy travel insurance in India is much lower compared with the jump in travel among Indians. Cost is one of the main reasons that people decline to buy travel insurance, but considering all the potential costs that can be incurred by not having insurance, taking out a policy is actually a very prudent investment.

Travel insurance can be divided into five broad categories, comprising student travel insurance, senior citizen insurance, tourist travel insurance and insurance for business travel, which can be of a short or long duration, and domestic travel insurance. Travel insurance covers risk from unexpected exigencies during the trip.

Medical care: The most obvious benefit is that if one falls sick during his trip, he will be covered for any medical care he needs. In most foreign countries, having a health insurance policy is mandatory. Medical costs could quite easily run into thousands of dollars. The fact that one is on a holiday in a foreign country increases the chances of falling sick or having an accident.

Medical evacuation and repatriation of remains: In the event of the insured being extremely sick and unavailability of a good hospital where he is, he will be evacuated to the nearest good hospital for treatment. Travel insurance also pays for the cost of travel for the insured to his home country after medical treatment, along with a medical professional. These policies also cover the cost of repatriation of remains, in the case of the unfortunate death of the policyholder while overseas.

Trip cancellations, delays, baggage and passport loss: Unforeseen exigencies at home or adverse weather and travel problems can all mean that one may be unable to travel. The expense of cancelling tickets without having insurance can be enormous. This stress and cost can all be avoided by having a good travel insurance policy. Travel insurance can also cover the cost of flight delays. There are several other benefits of having travel insurance that cover loss of passport, while in the foreign land and home insurance in India while one is on a trip abroad, among others.

Claims process: In case of any event leading to a claim under a travel insurance policy, the customer needs to call the helpline numbers provided with the policy and register the claim. It is important to inform insurers as soon as hospitalisation takes place or about a loss covered under the insurance policy. Representatives answering the helpline guide customers on the claims procedures and documents required, depending on the type of the claim registered. Claim forms can be forwarded to the customer by email or fax or can be downloaded from the website of the insurer. Customer will need to duly fill the claim form and attach documents as required depending on the nature of the claim. Once the documentation is completed, the claim is processed.

Domestic travelers: People are still largely unaware about the availability of domestic travel insurance in India. Awareness needs to be built on the fact that in a travel insurance policy, in addition to medical coverage, there are non-medical coverage that the customer can avail of, including a trip cancellation and interruption, trip delay and home insurance.

Domestic travel insurance has witnessed good popularity in the past four-five years and is growing fast, but the domestic business is likely to remain lower than overseas business for some time to come.

To provide cheaper cover for domestic travellers, several insurance companies have tied-up with airlines and are offering travel insurance for as low as Rs 99. These domestic travel insurance policies bundled with air tickets are customised, especially for travel portals, such as Makemytrip.com and Yatra.com and airline websites, and offer good value for money. For premium as low as Rs 99, one gets risk coverage against flight delays, trip cancellation, medical emergency and baggage loss.

A basic policy offers personal accident cover, hospitalisation expenses in case of injury, baggage loss and compensation for cancellations or delays. Such customised policies are better suited for occasional flyers, while frequent travellers should buy a travel policy that cover risk for a longer period of time and for multiple travels. For example, ICICI Lombard General Insurance’s travel insurance for Rs 99 pays Rs 10,000 for baggage loss, Rs 3,000 for baggage delay and Rs 10,000 for trip cancellation and interruption.

Some insurers view online travel as an additional distribution option. “We view airlines and online aggregators as additional distributors for travel insurance. The main sourcing of the travel insurance business is through travel agents,” said SS Gopalarathnam, managing director of Cholamandalam MS General Insurance.

Like all insurance products, these travel insurance policies also come with exclusions. Before buying a product, one must see the inclusions and exclusions under the policy to be sure of the scope of policy. To make each kind of claim, such as baggage loss, every insurance company has conditions that one must fulfil to be eligible for filing for a claim. The policy comes into effect on the day of travel. All the companies offer 30 days of cover or until the person returns to the destination of origin.