IndiGo chaos exposes truth: Your travel insurance may still not save you

While travel insurance plans cover financial loss due to flight cancellations, delays and disruptions, policyholders must always cross check on the policy's clauses, terms and conditions.

The ongoing IndiGo Airlines crisis, which left thousands of passengers stranded after more than 4,500 flight cancellations in the past week, has thrown fresh light on one of India’s most underused financial protections: travel insurance.

 

IndiGo — which operates nearly 2,200 flights daily — has been battling a pilot shortage caused by delayed transitions to new flight duty and rest norms. The resulting cancellations left terminals packed, passengers stranded, and consumer complaints soaring.

 

Despite record air travel, repeated flight disruptions, and rising turbulence-related incidents, travel insurance in India remains a tiny segment — less than 1% of the ₹3-lakh-crore general insurance industry.

 

 

A booming aviation market, but negligible insurance uptake

 

According to IRDAI data, only 23 lakh overseas travel policies were sold in FY24, covering 7.5 million travellers and generating premiums of just ₹1,099 crore.

 

Domestic travel insurance is even smaller: ₹125.5 crore in premiums across 43 crore lives — most of which is embedded, low-value coverage bundled with train tickets or OTAs.

 

Why Indians still don’t buy travel insurance

 

Industry experts say India’s low penetration is a mix of behavioural bias, limited awareness, and friction at the point of purchase.

 

“In developed markets, travel insurance is seamlessly embedded while booking,” said Narendra Bharindwal, President, Insurance Brokers Association of India. In India, it remains optional and unprompted. Most passengers skip it unless required for visas.

 

Many travellers  mistakenly believe travel insurance is “only for rare accidents,” when in reality it compensates for delays, cancellations, missed connections and baggage issues — events that have become routine.

 

Sudhish Ramteke of Anand Rathi Insurance Brokers said domestic uptake remains stagnant because travellers assume DGCA or airlines will handle disruptions. “Low awareness, trust issues around claims, and the extra effort required to buy an add-on also reduce interest."

 

IndiGo meltdown shows why insurance matters

 

The recent crisis has shown how quickly even top-tier airlines can unravel.

 

"In the wake of massive flight cancellations and delays, with IndiGo cancelling more than 2,500 flights across the country in the past week. Thousands of passengers faced hours-long delays, the recent incident shows how unpredictable air travel can be for passengers. In such moments, travel Insurance offers fixed pay outs if the traveller is stranded for a specified number of hours (6–12 hours). They also reimburse the cost if the flight is cancelled and traveller has to book a new flight, or arrange hotel stay, cover meals, essentials, and other emergency purchases. Beyond the financial safety net , the insurer also provides 24x7 assistance and emergency support to help passengers manage disruption with less stress in unfamiliar locations. For a small and very affordable premium, travel insurance provides essential protection when travel plans fall apart without warning," said Meet Kapadia, Head of Travel Insurance at Policybazaar.com.

 

Kapadia explains that policies offer:

 

• Fixed payouts when delays cross 6–12 hours
• Reimbursement for rebooking a new flight
• Hotel, meals, essentials during long disruptions
• 24×7 emergency assistance

 

What all does travel insurance cover? 

Trip cancellation / curtailment: Refund for non-refundable flights, hotels, and activities

 

Flight Delay Allowance: A lump-sum payout once delay exceeds the threshold (no bills required)

 

Average payout for domestic delays: ₹1,000–₹5,000

 

Higher claims for trip cancellations

 

Check your credit card first

Many passengers don’t realise that some credit cards offer in-built travel insurance. India has nearly 650 credit card variants and about 8% include travel insurance. 

Coverage typically ranges from ₹10,000 to ₹25,000, but applies only when the ticket is booked using that card.

 

Insurance through OTAs: convenient, but read the fine print

 

Millions of travellers buy add-on insurance on platforms like IndiGo, MakeMyTrip or Cleartrip without realising what’s covered. The scope varies widely, and fine print often determines whether a payout is triggered.

 

What airlines must provide even without insurance

 

DGCA’s Civil Aviation Rules require airlines to offer:

• Full refund or alternate flight if a flight is cancelled
• Meals and refreshments for stranded passengers
• Hotel accommodation + transfers during long delays
• These rights are mandatory — insurance kicks in only after these obligations are met.

 

The Fine print: Most large-scale operational disruptions are not covered

 

CoverSure  said that when the disruption stems from an airline’s internal issues, the cancellation itself may not always be covered, even though connected losses usually are.

 

“When a disruption stems from an airline’s internal or operational issues, as seen in the IndiGo case, most travel insurance plans don’t cover the cancellation itself. What they do cover are the secondary impacts, like baggage delays, missed connections, and trip delays,” said Saurabh Vijayvergia, Founder & CEO, CoverSure.

 

What travel insurance may cover

 

• Flight delays or cancellations due to operational issues — but only after a minimum wait period (often 3–6 hours depending on the policy). 

 

• Secondary losses tied to these disruptions, such as:

— Missed connections

— Baggage delays

— Trip delays

— Reimbursement for meals, hotel stays or alternative flights if the policy includes those benefits. 

 

• Many credit cards also offer complimentary travel coverage for delays, missed connections and baggage issues — a benefit often overlooked by cardholders. 

 

 What travel insurance may not cover

 

• Short delays under the policy’s minimum threshold (e.g., less than 3–6 hours). 

 

• Airline operational decisions alone — some policies don’t pay out just because the airline cancelled a flight for internal reasons, unless the insurance specifically includes that scenario. 

 

• Weather-related cancellations/acts of God may be excluded or treated differently, depending on the terms. 

 

• If you voluntarily rebook on your own or decline the airline’s alternate offer, insurers may treat it as a personal choice and deny a claim.  

Trip cancellation is one of the most valuable yet least understood features of travel insurance.

 

“If the booked flight is cancelled, delayed, shortened or diverted, the travel policy covers the cost of alternative transport and accommodation,” Rakesh Kaul, chief distribution officer (retail business), Bajaj General Insurance told Business Standard earlier. 

 

Ignoring this cover can be costly. Travellers may have to pay international prices for cancellations.However, experts point out a common misconception: not all airline cancellations qualify for insurance payouts. As seen during the recent IndiGo flight disruptions, passengers often assume insurance will compensate them.

 

For cancellations by the airline, regulations entitle passengers to a refund from the airline — not from the insurer.

 

Policies reimburse cancellations only if caused by specific events such as:

 

Medical emergencies

Death of an immediate family member

Natural disasters

 

Common exclusions include:

 

Strikes

Civil unrest

Government travel bans

Pre-existing medical conditions that flare up

Pregnancy-related complications

 

Many policies also require cancellations to occur at least 24 hours before departure.

   

Claims and documentation matter

 

• For a successful claim, the insurer typically requires:
• Proof of delay/cancellation directly from the airline (email, SMS, delay certificate)
• Boarding pass and ticket details
• Receipts for meals, hotels and other expenses incurred due to disruption 
• Without this documentation, many claims get rejected — even when the disruption objectively happened.