IndiGo crisis: How ‘cancel for any reason’ travel insurance cover can save you from sudden flight cancellations
The CFAR benefit
Consider this: You had booked your tickets well in advance and were scheduled to travel to Delhi from Mumbai in the first week of December, when IndiGo Airlines’ operations plunged into disarray.
To avoid enduring the ordeal that thousands of passengers had to go through, you decide to cancel your scheduled trip.
Watch out for a clause in your travel insurance policy called ‘Cancel for any reason (CFAR)’. If you had opted for such an optional benefit while booking your tickets through travel portals, charges incurred due to the change in plans will be reimbursed by the insurance cover. “If a customer chooses to cancel her flight due to such disruptions, a claim can be made under CFAR, provided the cancellation occurs typically 24 hours before the departure time (or the time excess as mentioned in your policy),” says Akanksha Jain, Head, Reporting & Reserving, Digit Insurance.
Adoption of such optional covers is growing in popularity, say insurers, as travellers seek greater control over their itineraries.
Airlines do offer compensation for flight delays beyond 2-6 hours, but what if you decide to cancel your travel plan in view of the widespread disruption in flight schedules or any other personal reason? At present, this feature is mainly offered under policies sold through travel portals such as MakeMyTrip and Yatra at the time of flight booking and credit cards. “CFAR is increasingly integrated into digital platforms, with collaborations between insurers, credit card issuers, travel agencies, and online booking sites to widen reach,” says Chandrakant Said, Vice President- Consumer Underwriting, TATA AIG General Insurance.
“Under the CFAR benefit, the insured is covered for the non-refundable amount up to the sum insured if the ticket is cancelled before the commencement of the journey or for the additional amount incurred up to the sum insured if the ticket is rescheduled before the commencement of the journey,” adds Said.
According to Meet Kapadia, Head, Travel Insurance, Policybazaar.com, CFAR primarily covers voluntary cancellations, with premiums ranging from Rs.350 to Rs.1,000, depending on the route and time of booking. “CFAR pricing is dynamic. High-risk routes with frequent cancellations see higher premiums reflecting the insurer’s risk. Likewise, booking earlier (15-20 days ahead) tends to increase premiums due to higher cancellation probability. The product has not evolved much functionally, but pricing has adapted,” he says.
However, no-shows are not covered, nor are cancellations made after the stipulated deadline – 12 to 24 hours before departure, depending on the policy terms.
“Claim process may vary from insurer to insurer. Typically, claims are processed instantly through tech-enabled integrations as soon as a customer cancels the flight through the platform. In case the customer wants to file an offline claim, a copy of the flight ticket or a proof of cancellation might be required,” says Jain. Some might ask for confirmation from the airline of cancellation or rescheduling of the booking and proof of the amount refunded by the airline.
Not just IndiGo
The winter months of December to February typically see many flight delays due to fog and poor visibility. Many IndiGo passengers were taken aback by the recent chaos. Insurtech firm Policybazaar.com has witnessed a close to 15% increase in claims related to international flight cancellations, as many missed connecting flights during this period.
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