Beyond INR 0.45: A Critical Look at IRCTC Travel Insurance

Every day, millions of Indians board trains with the hope of a safe and timely journey. Hidden within the digital ticketing interface lies a simple checkbox—one that promises security, assurance, and financial protection in the rare case of a railway accident. This checkbox facilitates what is termed the IRCTC Optional Travel Insurance Scheme.

For an additional INR 0.45, travelers are made to believe that they are insured against death, disability, and hospitalization. It appears to be a well-thought-out, welfare-driven initiative—but do they actually deliver as much as they seem to?

This article offers a detailed, investigative exploration into the often-overlooked domain of IRCTC’s optional travel insurance, questioning whether it truly safegaurds passengers/consumers or is it quietly benefiting from fear & passenger’s vulnerability. 

The analysis begins by unpacking the legal scaffolding that supports these policies—drawing from the Railways Act, 1989, the Insurance Act, 1938 and key provisions under the IRDAI (Protection of Policyholders’ Interests) Regulations, 2017. These frameworks establish the statutory and regulatory environment within which railway travel insurance operates.

The article compares the three main insurers—ICICI Lombard, Royal Sundaram, and Shriram General—revealing similar pricing but differences in coverage and service. It highlights how vague contract terms and complex claim procedures often burden victims. Finally, it questions the fairness of the scheme, noting high insurer profits despite low claim payouts.

In closing the gap between legal analysis and on-the-ground reality, the article seeks to uncover the way in which a low-cost insurance scheme that appears benevolent in nature can, in practice, serve more as a profitable mechanism than a solid safety net for Indian train travelers.

Why is this a problem?

Initially, INR 0.45 could appear to be nothing, but when it is multiplied by crores of passengers, it is a humongous revenue pool with very little accountability. 

For instance: In the financial year 2023–24, about 803 million passengers booked their train tickets online via IRCTC. Among these, approximately 465.5 million travelers chose the voluntary travel insurance scheme available at the time of ticket purchase. Every such traveler paid a small premium of INR 0.45, aggregating to a total premium amount of approximately INR 20.95 crore by the insurers.

This implies that the amount that remained—close to INR 17 crore to INR 18 crore—was kept by the insurance companies following negligible claim payments. This information tells us that while the insurance policy has broad subscriptions, its returns are enjoyed by very few passengers only, and this raises questions about consumer awareness and fairness in the enforcement of this insurance scheme.

Rules and other legal frameworks:

The IRCTC travel insurance plan is regulated by stringent regulatory guidelines established by the Insurance Regulatory and Development Authority of India (IRDAI). The corresponding frameworks that regulate this model of insurance are:

Railway Act,1989:

The Railways Act, 1989 is the master law that regulates rail operations in India, including passenger safety and compensation. Under railway insurance policies, Section 124-A provides for compensation in the event of death or injury due to train accidents without regard to fault, under a legal principle that is referred to as strict liability.

It is a categorical obligation of Indian Railways to provide compensation to passengers in case of death or injury due to a train accident or an untoward incident—irrespective of fault and negligence. This liberal legal provision enables victims or their kin to be given a fixed statutory compensation merely by establishing that the incident took place during the journey of the railway. The law prioritizes passenger welfare and underscores the state’s accountability in public transportation safety. Under this, the law grants a compensation of INR 5 lakh

On top of this statutory requirement there are other travel insurance policies available from IRCTC. They are voluntary options at the conclusion of the buying consumer purchasing the ticket. They are made available by private insurers via IRCTC. The optional insurance is designed to provide supplementary monetary protection—not to substitute or decrease the statutory compensation required by law.

The players offering the option insurance are: ICICI Lombard General Insurance Company Ltd., Shriram General Insurance Company Ltd., Royal Sundaram General Insurance Co. Ltd. which are governed by the Insurance Act, 1938 and the IRDAI rules.

Insurance Act, 1938:

The Insurance Act, 1938 is the primary legislation that regulates all forms of insurance businesses in India. It makes sure that insurance companies are adequately registered and licensed, and that they adhere to reasonable practices such as transparent pricing and full disclosure of policy terms to clients.

The Insurance Act also incorporates a group of financial and ethical regulations from Sections 40 to 49. These sections try to regulate how insurance businesses manage their costs and treat their customers (policyholders).

For example, Section 40 limits commissions paid to agents such that a majority of the premium—such as INR 0.45 charged for rail insurance—is actually spent on coverage instead of profit. Other sections like 40A and 40B cap the amount spent on administrative expenses such that companies cannot overspend and shortchange customers at the time of claims.

Additionally, the law prevents insurers from using unfair methods to attract customers, such as offering secret rebates or unapproved discounts. It also ensures that only trained, licensed agents can sell insurance policies or earn commissions, protecting passengers from scams.

Finally, Sections 45 to 49 ensure significant protection to policyholders, including prohibitions against challenging the validity of insurance contracts after three years by the insurance company on the basis of fraud or misrepresentation and ensuring companies keep things transparent in their claim procedures and finances.

On top of the Insurance Act, 1938 & the Railways Act,1989, the Railway Insurance providers are required to adhere to the Insurance Regulator & Development Authority of India (IRDAI) Regulations as well.  

IRDAI (Protection of Policyholders’ Interests) Regulations, 2017

The IRDAI (Protection of Policyholders’ Interests) Regulations, 2017 aim to safeguard the interests of individuals who buy insurance—very relevant for train passengers buying optional travel insurance while reserving train tickets via IRCTC. The regulations ensure that insurance organizations behave justly and transparently. The power to determine the INR 0.45 premium for railway travel insurance provided by IRCTC falls mainly with IRCTC in coordination with the insurers, approved and regulated under the guidelines set by IRDAI.

According to Clause 6 of the Regulation, insurance companies have a mandate to make all key terms of the policy clear and simple to understand, such that the passengers know what they are covered against without ambiguity or legal terminology.

Clause 8 enforces the duty of the insurers to settle claims in time and in a reasonable manner, so the beneficiaries do not find themselves at a loss in times of need.

Just as significant is Clause 14, which bans pre-selection of insurance at the time of ticket booking. This guarantees that the choice to have insurance will be totally voluntary, based on informed consent and not default inclusion.

Together, these Acts and regulatory provisions serve not just as formalities, but as essential safeguards that promote accountability, empower consumers, and strengthen public trust in the insurance framework linked to public transport. Individual Insurance Companies providing life insurance for IRCTC passengers that are regulated by the above-mentioned laws, provide different plans to the customers. They make certain customizations for the sake of attracting the consumers.  

Customizations Made by Life Insurance Companies:

To determine if INR 0.45 is reasonable to the customers, we did a comprehensive comparative review of the policies offered by its three empaneled insurers—ICICI Lombard, Royal Sundaram, and Shriram General Insurance.

The following table contains an organized summary of essential coverage features, claim process, and service assistance provided by each insurer.

Though all three insurers have a standard premium rate of INR 0.45 and identical core features—e.g., INR 10 lakh in the event of death or complete disability—the table highlights subtle variations with regard to hospitalization cover, updation of nominee, multilingual services, and extra riders including delay and cancellation cover.

This comparative analysis not only makes policy details easy to understand but also indicates how the approach of each insurer could impact a passenger’s ability to access and use the coverage during times of need.

All the problems with the 0.45 Insurance:

Even though IRCTC’s add-on travel insurance is marketed as a low-cost protection for travelers, its actual usefulness in real life is quite below expectations. Behind the assurance of handsome coverage is a maze of procedural obstacles which render access to benefits challenging. 

From complex documentation standards and unclear contractual language to a total lack of on-ground assistance, the claims process imposes a crushing burden on victims and their kin—just when they are least able to face it. This subsection explores the structural and systemic impediments that transform a consumer-friendly policy into a complex and frequently disheartening process.

Complex Documentation and Claim Requirements:

One of the strongest barriers that passengers encounter while attempting to avail themselves of IRCTC’s voluntary travel insurance is the paper-intensive claims process. Claimants are asked to provide a string of official records—like FIRs, post-mortem reports (in the event of death), medical certificates, confirmed travel information (such as PNR), etc.

During times of emergency, most particularly for grieving families or those with medical emergencies, this is not possible. Most are not even aware of the availability of the insurance in the first instance, and let alone the complex steps needed to claim it.

Rural passengers or those who are unfamiliar with official procedures encounter even bigger obstacles to accessing government offices, hospitals, and police stations. Consequently, deserving claims never reach the authorities or get rejected for procedural shortcomings, working against the purpose of the policy to grant early relief.

Essentially, insurers very skilfully appear to exploit the procedural complexity to circumvent the objective of the Insurance Act, 1938 i.e. to ensure that a majority of the premium—like the INR 0.45 charged for rail travel insurance—is directed toward genuine risk coverage rather than profit. 

Structural Issues in IRCTC’s Implementation:

A number of systemic issues in how IRCTC runs this insurance scheme further stall its effectiveness. 

Firstly, the most glaring omission, perhaps, is the total lack of real-time or ground support. There is no assistance from IRCTC or the empanelled insurers at the railway station, hospitals, or accident areas. During times of trauma, families are completely left on their own to interpret processes, gather documents, and deal with a faceless electronic system. 

Secondly, passenger awareness is extremely low—Crucial aspects like completing nominee verification which is the prerequisite for claiming insurance) & the process of changing it, if need be, are not effectively communicated, either by the IRCTC website or insurance companies, resulting in unnecessary delays in settlement.

Furthermore, a report conducted in 2016 established that almost 65% of passengers waive off the scheme, and those who include it usually do so unknowingly. Despite the increase in figures post Covid-19, it is highly questionable the awareness that consumers have with respect to insurance details.

Thirdly, the whole system works via digital-only interfaces, mandating internet access and submission online. Currently, as of 2024, only 25% of rural Indian households are digitally literate, with 61% in urban areas. This leaves most of the population excluded from the process digitally, especially when they need it the most.

Fourthly, while Clause 14 rightly prohibits the pre-selection of insurance during ticket booking to ensure that passengers opt in voluntarily, the spirit of informed consent is diluted by IRCTC’s automated rotation system. 

Passengers are indeed asked whether they wish to purchase insurance, but if they say yes, the insurer is selected for them at random from a panel of three—ICICI Lombard, Royal Sundaram, or Shriram General Insurance. 

This system, though ostensibly neutral, deprives passengers of a meaningful choice among the available providers. The coverage offered by these insurers may vary in subtle but significant ways—differences in claim processes, customer support, exclusions, or ease of redressal. Yet passengers cannot compare these before making a decision. As a result, the process reduces consent to a formality, falling short of the informed and empowered choice that Clause 14 aims to protect.

Last but not the least, there is the refusal by all participating insurers to refund the INR 0.45 premium when a train ticket is cancelled. This might seem negligible in isolation, but it reflects a deeper imbalance. 

Given the already low rate of ticket cancellations, this policy does not serve any risk management function; it merely reinforces a revenue-first model. If insurers are earning significant profits from pooled premiums and rarely processed claims, as the data suggests, then withholding refunds in such clear-cut cases raises concerns about fairness and intent. 

Disposal of Claims and Ambiguity in Contract Language:

Clause 6 of IRDAI Regulation mandates that insurers present all key terms in a clear and simple manner, enabling passengers to understand what they are covered for without ambiguity or reliance on legal jargon. However, in practice, the policies provided by the companies do the opposite.

For instance, “accident” is initially defined to cover acts of terrorism. Yet subsequent clauses specifically rule out compensation for nuclear, chemical, and biological terrorism. While this might be an insurers’ sensible risk-limiting decision, it does produce a false impression of the full coverage available to ordinary consumers. This inconsistency is not necessarily a sign of ill will but does emphasize the requirement for clearer, easier-to-understand policy language to facilitate better-informed decision-making and trust.

ICICI Lombard’s policy includes a clause that allows the insurer to cancel the contract at any time, even after three years of continuous coverage, which is the direct violation of Section 45 to 49 of the Insurance Act, 1938. 

The spirit of this provision is to grant legal certainty to policyholders and prevent insurers from arbitrarily terminating coverage once the policy has matured beyond the contestability period. 

ICICI’s clause undermines this statutory protection and introduces unacceptable uncertainty into the contract, effectively nullifying the safeguard that Section 45 was designed to provide. Such a practice not only contravenes the letter of the law but erodes consumer trust by placing all control in the hands of the insurer, rendering the policyholder vulnerable despite statutory protections intended to ensure otherwise.

Clause 8 places a clear duty on insurers to settle claims promptly and reasonably, ensuring that beneficiaries are not left at a disadvantage during times of distress. However, when policies are written in ambiguous terms or contain conflicting definitions passengers are left confused about their actual entitlements. 

Timelines for settlement range extremely widely, with more than 1,200 claims (close to 25%) taking longer than 90 days to settle. This ambiguity can delay the claims process, lead to rejections, or prevent claims from being filed at all, effectively putting claimants at a loss right when they need support the most. Such practices, though perhaps technically compliant, undermine the essence of Clause 8.

Cumulatively, all these layers of complication—from documentary obstacles and exclusion from the digital world to opaque contractual language—constitute a systemic pattern that makes sure that although millions of policies are sold, very few are ever successfully redeemed. The end result is a design that looks consumer-friendly on paper but in real terms is out of reach, raising questions about fairness, transparency, and accountability.

Verdict: Is it a Fair Price?

If travel insurance is truly meant to offer a safety net for passengers, the current system betrays that purpose. What appears to be a token premium of INR 0.45 per passenger is, in fact, a gateway into a scheme that is murky, inaccessible, and disproportionately profitable for insurers. Rather than functioning as a public welfare mechanism, this model increasingly resembles a revenue-generating machine built on public fear and minimal accountability.

The foundational idea behind insurance—risk pooling—assumes that many will pay small amounts so that the few who suffer loss are compensated. But in this case, not only is the insured risk statistically rare, the real chance of receiving a payout is even rarer, thanks to layers of procedural red tape, vague terms, and an absence of effective support. 

In FY 2023–24, insurers collected over INR 20.95 crore in premiums, yet only about 40 reported accidents qualified for claims. Even among these, the majority likely saw no payout due to denial, abandonment, or sheer confusion.

With estimated disbursals below INR 3 crore, over INR 17 crore remained with insurers—revealing a low-risk, high-margin model that works well for them but poorly for the insured. Worse, passengers have no choice of insurer, no meaningful communication, and no clarity in terms—only a ticking checkbox at booking time that offers a false sense of security.

From a legal standpoint, the scheme may check the boxes. But from a consumer-rights perspective, it fails spectacularly. When people pay believing they’re buying protection but are instead funneled into a process defined by ambiguity, neglect, and denial, the model becomes not just unfair—but exploitative.

Real reform would mean honest claims data, transparent terms, a choice of insurer, simplified procedures, and actual human support. Until then, the INR 0.45 scheme remains a hollow promise—marketed as insurance, but operating more like a stealth tax on fear.

Also Read: 5 Market Situations that Destroy India’s EV Hopes

Gauri Dua [Author]