All About General Insurance

Leaving with family for a weekend getaway? Just think of all the assets you possess like your home, car, jewellery and other valuables. What if you lose all of it due to some fire, theft or a natural calamity? It would be all gone even before you might think about saving it.

Safety is the prime concern and avoiding any mess falls as the next. At times, you might end up facing some unexpected losses for which you were completely unaware. What then? Do you definitely look for some security system? Or just leave things on destiny?

Well! Nothing would work except a security system that backs us. In other words, we need an insurance cover.

“To insure is to protect and indemnify. It does not mean Prevention of loss”.

What are the different types of Insurance?

There is a distinction between the types of insurance one is life insurance and other is non-life or general insurance. As an individual, you will be covered under the Life insurance policy. The reimbursement under the policy can be withdrawn on the event of death or maturity of the policy.

On the other hand, a General Insurance Policy will pay for the losses that may occur during the policy period only.

What is a General Insurance

• A policy or agreement between the policyholder and the insurer which is considered only after realization of the premium.
• The premium is paid by the insurer who has a financial interest in the asset covered.
• The insurer will protect the insured from the financial liability in case of loss.

How does the concept of General Insurance work?

Insurance is a concept that applies to a large group of people which may suffer the same risk in the same conditions or region. The money collected as the premium can be called as a pool and when anyone faces a loss, the person is paid from that pool.

Still perplexed at how does a general insurance policy come into play? Consider that your mother suffered a heart attack suddenly and she needs a transplant. At the same time, your daughter’s college fee was due. It definitely is a huge expense to be made at the same time and none can be preferred over the other. In this time of stress, the family’s health insurance policy can save your burden and the fees can be paid from the savings. A General Insurance Policy here works to save your burden for money.

Once we’ve understood what General Insurance is, let us understand how and when will the policy apply.

A DidUCheck’s disclose on how does a loss occur?

The loss may occur due to perils like fire, storm and flood, earthquake, theft, accident, health, travel, and other similar factors.

So now, we know that there exists an asset which is exposed to risk. And in case of the occurrence of losses (subject to the limit of the policy) plays the insurance which pay for the damages.

Why do we need General Insurance?

Imagine you’re driving back home in your car and suddenly, a taxi hits you from behind. Your car has a dent and its bumper has come off too. Now you need about Rs. 2000/- for the dent and Rs.7500/- for the bumper to be able to fix it all.

A car insurance policy, in this case, will play well. You can get the amount reimbursed under the insurance policy. Your car is the asset here in which you have a financial interest. But remember, an insurance policy will pay only as per its predefined conditions.

Difference between General Insurance and Life Insurance

Applicability of claim:

General Insurance >

Arun took a Fire Insurance Policy for his factory. The Sum Insured for the factory was Rs.1 cr and the premium was Rs. 10 lakhs. In case of fire or loss due to any peril, the insurance company will pay the claim amount after the deductible (as applicable).

Life Insurance >

Arun took a Life Insurance Policy for Rs. 1 crore. He had to give an annual premium of Rs. 20000 for 50 years. After 10 installments, Arun met with an accident and passed away. Arun’s family received an amount of Rs.1 crore. The reimbursement under the life insurance is made either at the time of maturity or death.

Amount of Reimbursement:

General Insurance >

Sheela got her car insured for Rs.5 lacs. She got her car banged and her car’s bumper came off. The repair charges for the bumper was Rs.15,000/-. The insurance company will pay off the amount after the deductible. General insurance works as per the policy limits and conditions.

Life Insurance >

Sheela chose to buy a Life Insurance Policy worth Rs.50 lakhs. The total time for which she had to deposit the premium was 10 years. After 10 years, she received Rs. 50 lakh. The Life Insurance Policy is an investment policy which is paid on maturity of the policy.

Functional Period:

General Insurance>

Prakash bought a Fire Insurance for his factory and got the building, equipment, and other fixtures. The policy was issued on 2.03.2019 and will be renewed on 1.03.2020. The General Insurance Policies are issued for a period of 1 year.

Life Insurance >

Prakash bought an Endowment Policy which will pay him some proceeds on the maturity or otherwise pay some amount to his family members in the event of Prakash’s death. The Life Insurance Policy is issued for Life Time or till the time of the maturity period.

Payment of Premium:

General Insurance >

Madhur bought a car and got its insurance also. The next year, he sold his car. He bought a bike and did not get the renewal for the car. Under the General Insurance Policy, the premium will be paid for one year till the renewal. Madhur sold his car and hence, no renewal or no payment of premium.

Life Insurance >

Madhur bought a Money Back Policy for 20 years. He will have to pay the premium for 20 years with money being received after every 3 years. The premium will be paid till the total term of the policy, that is, 20 years. Under the Life Insurance Policy, the premium will be paid for the total term of the policy.

Insurable Interest:

General Insurance >

Rikant bought a Tata Safari in the year 2018. He got its insurance at the same time. The next year, he sold the car to Shweta and the policy was renewed again as the vehicle will be in use. The policy was renewed by Shweta and not Rikant. Under the General Insurance Policy, the insurable interest of the policyholder should be present at the time of renewal and the loss.

Life Insurance >

Rikant took a Term Plan and got his policy issued from ABC Life Insurer. It is important for Rikant to be present at the time of contract. Under the Life Insurance the individual who has the insurable interest should always be present.