Compulsory Insurance on Train Travel to be Lifted

Few train travelers in China know about it, but for decades they have paid for safety insurance whenever they went on a trip by rail. The coverage has been included in their train fares, accounting for 2% of the total cost.

China’s State Council has recently decided to abolish what amounts to be involuntary purchase of insurance. Starting next year, when a traveler purchases a train ticket, insurance will not be automatically included in the fare. With this new policy, 61 years of compulsory safety insurance on train travel will come to an end.

Gone also will be the compensation limit of ¥150,000 on bodily injury and ¥2,000 on luggage loss. In reality, due to the lack of knowledge on the existence of the automatic purchase of the train travel insurance, relatively few Chinese travelers claimed compensations in cases of accidents and losses.

When the announced new policy goes into effect at the beginning of the next year, it will be up to individual travelers to decide if they want to purchase insurance for their trips. In a way, this is a victory for insurance companies, which have wrestled the powerful state-controlled railway system over the issue. Little by little, state monopoly over railway transportation is chipped away, for better or worse.

There used to be compulsory insurance on air travel and ship travel too. They were respectively abolished 1987 and 1989.

With the automatic purchase of insurance removed, will train fares be 2% lower than what they have been? Authorities say it is not clear what will happen in this particular regard. Unclear also is how train travelers will now buy their insurance if they decide to do so.