What
is General Insurance?
Insurance
other
than
‘Life
Insurance’ falls under the category of General Insurance.
General Insurance comprises of insurance of property against fire,
burglary
etc, personal insurance such as Accident and Health Insurance, and
liability
insurance which covers legal liabilities. There are also other covers
such as
Errors and Omissions insurance for professionals, credit insurance etc.
Non-life
insurance
companies
have
products that cover property against Fire and allied
perils, flood storm and inundation, earthquake and so on. There are
products
that cover property against burglary, theft etc. The non-life companies
also
offer policies covering machinery against breakdown,there are policies that cover the hull of ships and so
on. A Marine Cargo policy covers goods
in transit including by sea, air and road. Further, insurance of motor
vehicles
against damages and theft forms a major chunk of non-life insurance
business.
In
respect of insurance of property, it is important that the cover is
taken for
the actual value of the property to avoid being imposed a penalty
should there
be a claim. Where a property is undervalued for the purposes of
insurance, the
insured will have to bear a rateable proportion of the loss. For
instance if
the value of a property is Rs.100 and it is insured for Rs.50/-, in the
event
of a loss to the extent of say Rs.50/-, the maximum claim amount
payable would
be Rs.25/- ( 50% of the loss being borne by the insured for
underinsuring the
property by 50% ). This concept is quite often not understood by most
insureds.
Personal
insurance
covers
include
policies for Accident, Health etc. Products offering
Personal Accident cover are benefit policies. Health insurance covers
offered
by non-life insurers are mainly hospitalization covers either on
reimbursement
or cashless basis. The cashless service is offered through Third Party
Administrators who have arrangements with various service providers,
i.e.,
hospitals. The Third Party Administrators also provide service for
reimbursement claims. Sometimes the insurers themselves process
reimbursement
claims.
Accident
and
health
insurance
policies are available for individuals as well as
groups.
A group could be a group of employees of an organization or holders of
credit
cards or deposit holders in a bank etc. Normally when a group is
covered,
insurers offer group discounts.
Liability
insurance
covers
such
as Motor Third Party Liability Insurance, Workmen’s
Compensation Policy etc offer cover against legal liabilities that may
arise
under the respective statutes— Motor Vehicles Act, The Workmen’s
Compensation
Act etc. Some of the covers such as the foregoing (Motor Third Party
and
Workmen’s Compensation policy ) are
compulsory by statute. Liability Insurance not compulsory by statute is
also gaining
popularity these days. Many industries insure against Public liability.
There
are liability covers available for Products as well.
There
are general insurance products that are in the nature of package
policies
offering a combination of the covers mentioned above. For instance,
there are
package policies available for householders, shop keepers and also for
professionals such as doctors, chartered accountants etc. Apart from
offering
standard covers, insurers also offer customized or tailor-made ones.
Suitable
general
Insurance
covers
are necessary for every family. It is important to
protect one’s property, which one might have acquired from one’s hard
earned
income. A loss or damage to one’s property can leave one shattered.
Losses
created by catastrophes such as the tsunami, earthquakes, cyclones etc
have
left many homeless and penniless. Such losses can be devastating but
insurance
could help mitigate them. Property can be covered, so also the people
against
Personal Accident. A Health Insurance policy can provide financial
relief to a
person undergoing medical treatment whether due to a disease or an
injury.
Industries
also
need
to
protect themselves by obtaining insurance covers to protect
their
building, machinery, stocks etc. They need to cover their liabilities
as well.
Financiers insist on insurance. So, most industries or businesses that
are
financed by banks and other institutions do obtain covers. But are they
obtaining the right covers? And are they insuring adequately are
questions that
need to be given some thought. Also organizations or industries that
are
self-financed should ensure that they are protected by insurance.
Most
general insurance covers are annual contracts. However, there are few
products
that are long-term.
It
is important for proposers to read and understand the terms and
conditions of a
policy before they enter into an insurance contract. The proposal form
needs to
be filled in completely and correctly by a proposer to ensure that the
cover is
adequate and the right one