Travelling abroad? Get a comprehensive policy

Though more expensive after rupee depreciation, it still gives reasonable cover against a lot of eventualities

Travelling abroad this December? Remember: The rupee depreciation has not only increased the cost of travelling in the US and Europe, but other costs, like insurance cover, have also become more expensive. With the insurers seeking approval from the Insurance Regulatory and Development Authority (Irda) to increase their travel insurance premiums, premiums would get more expensive.  

Should you try to save on such costs? No. The comprehensive policy offered by insurers covers a lot you may not require. Besides medical cover, these have started giving hijack allowance and covering missed/delay in flight, loss/delay in baggage, emergency of hotel extension and catastrophe.

The premium of HDFC ERGO's travel policy is Rs 1,670 (for a 20-day trip) for a sum of $ 5 lakh, of which $1,000 (limit) is allotted to the loss of baggage and $3,000 towards hotel accommodation.

In comparison, a medical cover or basic travel policy will give $250,000 and cost 50 per cent less at Rs 800-900, depending on the age, a saving of Rs 700-800.

But, given the cost of travelling is high and the goods expensive, the premium is a small cost. What works in their favour is the wider coverage they offer.

Yashish Dahiya, chief executive, Policybazaar, says, “Loss of passport and hotel accommodation benefits can be useful compared to benefits like catastrophe and hijacks. However, it's difficult to claim such expenses as it's involves lot of paperwork, like copies of original documents and police reports.” In case of loss of a passport, you will have to give the police reports, and papers related to passport re-issuance and visa fees paid.

There are many frill covers, as well. Says Divya Gandhi, head, general insurance, and principal officer of Emkay Insurance Brokers, “There are benefits over and above the medical cover with no commercial value or any value for money.”

Comprehensive policies are limited in scope. If the policyholder loses his checked-in baggage, he will not get the entire sum of $1,000, but will only get the amount he had to spend on, say, buying a set of new bag, clothes, medicine and other necessary things. Krsihnamoorthy Rao, chief executive, Future General India Insurance, says, “The policies are more expensive compared to basic travel. The gap widens as the age of the policyholder increases.”

Yes, comprehensive policies are more expensive, limited in scope and involve a lot of papers. Despite all these, these make sense in the absence of a better product. Don’t be penny wise, pound foolish.