Ambition Learning Solutions: General Insurance

General Insurance

Ambition Learning Solutions: Solutions General Insurance

INSURANCE

INSURANCE = INSURE + ASSURANCE

Insurance is the means of managing risk and protection against financial loss arising as a result of contingencies, which may or may not occur. In other words, insurance is the act of providing assurance, against a possible loss, by entering into a contract, with one who is willing to give assurance. Through this contract the person willing to give assurance binds himself to make good such loss, if it occurs.

INSURANCE

LIFE INSURANCE

GENERAL INSURANCE

GENERAL / NON-LIFE INSURANCE

General insurance means managing risk against financial loss arising due to fire, marine or miscellaneous events as a result of contingencies, which may or may not occur. General Insurance means to Cover the risk of the financial loss from any natural calamities viz. Flood, Fire, Earthquake, Burglary, etc. i.e. the events which are beyond the control of the owner of the goods for the things having insurable interest with the utmost good faith by declaring the facts about the circumstances and and the products by paying the stipulated sum, a premium and not having a motive of making profit from the insurance contract.

Ambition Learning Solutions: General Insurance

WHY SHOULD ONE GET INSURED?

One of the main reasons one should insure is to protect ones belongings and assets against financial loss. When one has earned and accumulated property, protecting it is prudent. The law also requires us to be insured against some liabilities. That is, in case we should cause a loss to another person, that person is entitled to compensation. To ensure that we can afford to pay that compensation, the law requires us to buy liability insurance so that the responsibility of paying the compensation is transferred to an insurance company.

WHO SHOULD BUY GENERAL INSURANCE?

Anyone who owns an asset can buy insurance to protect it against losses due to fire or theft and so on. Each one of us can insure our and our dependents health and well being through hospitalization and personal accident policies. To buy a policy the person should be the one who will bear financial losses if they occur. This is called insurable interest.

PURPOSE OF GENERAL INSURANCE

Assets are insured, because they are likely to be destroyed and non-functional, through an accidental occurrence. Fire, Floods, Breakdowns, Lightnings, earthquakes, etc. The damage that this occurrence may cause the asset is the risk that the asset is exposed to. The risk means that there is a possibility of loss or damage. It may happen or may not happen. There has to be an uncertainty about the risk. If there is no uncertainty about the occurrence of an event, it cannot be insured against.

Ambition Learning Solutions: Solutions General Insurance

HOW INSURANCE WORKS

The business of insurance done by insurance companies (called insures) is to bring together persons with common insurance interests (sharing the some risks) collecting the share of contribution (called called premium) from all of them, and paying out ut compensations (called claims) claims to those who suffer. The insurer acts as a trustee for managing the common fund for and on behalf of the community.

Insurer Underwrites Risk

Payment of Premium by Insured

On Happening of Uncertainty

Loss Occurs

Claim Payment

PRINCIPLES CIPLES OF INSURANCE

1. Insurable Interest: The owner of property has a right under law to effect insurance on the property if he is likely to suffer financially when the property is lost or damaged. . this legal right to insure called insurable interest without insurable interest, the contract of insurance will be void, because of this legal requirement of insurable e interest , insurance contract contracts s are not gambling transactions. transactions 2. Indemnity: The object of the principle of indemnity is to place of insured after a los loss s in the same financial position, as far as possible as he occupied immediately before the loss. The effect of this principle is to prevent the insured from making a profit out of his loss. 3. Proximate Cause: The object of insurance is to provide indemnity for such losses as are caused cause by insured perils. If stocks are burnt, then the cause of loss is fire which is covered under a fire policy and hence the claim is payable. If stocks are stolen, the loss is not payable under the fire policy. As burglary is not t a peril covered. It stocks are burnt by a bomb dropped by an enemy country. Then the loss

Ambition Learning Solutions: General Insurance

is caused by war which is an excluded peril and hence not payable under the standard fire policy. Thus, it is important to determine the cause of loss to decide whether the loss is payable or not. 4. Utmost Good faith: In insurance contracts also, good faith is required to be observed but in a more onerous way. The proposer has a legal duty to disclose all material information about the subject matter of insurance to the insurers who do not have this information. Material information is that information which enables the insurers to make an underwriting decision, that is the decision (i) whether to accept the risk: and (ii) the rate of premium and terms and conditions of acceptance. This is called the legal duty of utmost good faith arising under common law. It is necessary the insured should provide proper information.

Ambition Learning Solutions: Solutions General Insurance

CLASSIFICATION OF INSURANCE

Theft / Burglary Marine

Fire Business Creditability Life Insurance

Insurance
General Insurance

Shop

Factory

Health Home / Individual Motor Home

Ambition Learning Solutions: General Insurance

PRODUCTS OF GENERAL INSURANCE

THEFT / BURGLARY INSURANCE:
The policy is available to commercial establishments, factories, godowns, shops, etc. Property in any form, including cash, in the business can be covered.

The Risk Covered is: 1. Theft of property after forcible and violent entry into the premises or theft following actual, forcible and violent exit from the premises. 2. Damage to insured property or premises by burglars. 3. Cash cover operates only when the cash is secured in a safe hand is granted only if the safe is burglar proof and is of an approved make and design.

Exclusion: 1. The loss of cash abstracted from the safe following the use of the key to the said safe or any duplicate thereof belonging to the insured is not covered unless such keys has been obtained by violence or threats of violence. This is generally known as key clause. 2. A complete list of the amounts of cash in safe should be kept secured in some place other than the safe.

For Eg: ABC Co. has insured goods of Rs. 10 lakhs from New India Assurance Co. Ltd by paying premium of Rs. 70,000. The goods of Rs. 5 lakhs have been stolen & the insurance Co. will investigate the case and after completion of required paper work settle the claim of prcised amount.

Ambition Learning Solutions: General Insurance

MARINE INSURANCE:
Marine insurance basically covers three risk areas, namely, hull, cargo and freight. The risks which these areas are exposed to are collectively known as "Perils of the Sea". These perils include theft, fire, collision etc. Marine insurance further includes; Marine Cargo: Marine cargo policy provides protection to the goods loaded on a ship against all perils between the departure and arrival warehouse. Therefore, marine cargo covers carriage of goods by sea as well as transportation of goods by land. Marine Hull: Marine hull policy provides protection against damage to ship caused due to the perils of the sea. Marine hull policy covers three-fourth of the liability of the hull owner (Ship owner) against loss due to collisions at sea. The remaining 1/4th of the liability is looked after by associations formed by ship owners for the purpose (P and I clubs).

The Risk Covered is: 1. Fire. 2. Vessel or craft being stranded, grounded, sunk or capsized. 3. Overturning or derailment of land conveyance. 4. Collision or contract of vessel. 5. Discharge of cargo to a port of districts. 6. General average sacrifice. 7. Jettison. 8. Washing overboard. 9. Earthquake or lighting.

Ambition Learning Solutions: General Insurance

Exclusions: 1. Nuclear losses. 2. Deliberate damage. 3. War risk. 4. Terrorism. 5. Willful misconduct of insured. 6. Ordinary leakage. 7. Delay, even if delay caused by the risk insured against. 8. Insolvency or financial default of owners.

For Eg: The Indian exporter was under a CIF contract with the U.S. importer. The value of goods was Rs 10,00,000 and the goods were insured of value of 110% of goods so to cover the freight & insurance premium paid. The cargo in which the goods were in transit was sunken due to overturning of cargo. So there was a total loss of goods. The claim was provided to exporter on the submission of claim documents i.e. 1. Proof of Insurance. 2. Shipping documents. 3. Proof of loss. 4. Claim on carrier. 5. Clearance/Forwarding documents.

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FIRE INSURANCE:
A fire insurance policy involves an insurance company agreeing to pay a certain amount equivalent to the estimated loss caused by fire to the insured, within the time specified in the contract. Fire insurance provides protection against damage to property caused by accidents due to fire, lightening or explosion, whereby the explosion is caused by boilers not being used for industrial purposes. The Risk Covered is: 1. 2. 3. 4. 5. 6. 7. 8. Fire i.e. burning of any property. Explosion/implosion as may happen to boilers. Aircraft damaged cause by pressure waves. Lightning. Riot, Strike, Malicious and Terrorism damage. Storm, cyclone, Typhoons, Hurricane, Tornado, Flood. Subsidence and landslide including rock slide. Missile testing operations.

Exclusions: 1. 5% of each and every claim resulting from the operation and lightning subsidence and landslide including rockslide covered under the policy. 2. Loss or destruction or damage cause by war. 3. Loss, destruction or damage due to nuclear hazard. 4. Loss, destruction or damage caused by pollution. 5. Loss, destruction or damage to bullion or unset precious stones for an amount exceeding Rs. 10,000. 6. Loss, destruction or damage to any electrical machine, apparatus, furniture arising from over running, excessive pressure, short circuit, self heating a leakage of electricity.

For Eg: ABC Company had bought fire insurance from oriental Bank ltd and due to short circuit fire takes place the insurer investigated with help of fire brigade report and the company got the claim as per his insurance.

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CREDITABILITY / LOAN INSURANCE:

Loan protection insurance, or loan payment protection insurance, is a form of payment protection insurance. This type of insurance can help you protect your monthly loan payments if you become unemployed or suffer an accident or sickness. Loan protection insurance will typically be used to protect a home loan, car loan or even sometimes personal loans. Under a loan insurance cover, the lump sum amount reduces as the outstanding loan decreases as per the loan schedule.

Benefits: Loan insurance means during tough times, you'll have an insurance cover to take care of the EMIs or of the outstanding loan amount. This is especially useful: In case of death or disability due to an accident or sickness; In case of loss of job 3. This effectively reduces the burden on your family in case of any unfortunate event that occurs with you. They would be saved from the financial trauma of paying off the loans. 4. In cases of a joint loan application, a joint loan insurance plan can be taken which will effectively cover you and your partner. 5. Both will have the reassurance that if either of you should be faced with redundancy, illness, have an accident or even die; your repayments will be made for you.
1. 2.

For Eg: A person takes a loan from ICICI bank for home for Rs. 500000 for 4 years; he pays regular installments upto 2 years. Unfortunately after 2 years due to disability he is not able to pay further installments to banks. So in that case the installments will be paid by Insurance Co. to ICICI bank.

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SHOP INSURANCE:
Shop Insurance is specially designed to meet the needs of small shopkeepers. It is a comprehensive insurance; catering to different insurance needs of shopkeepers. One policy per shop is generally given by insurers. It covers damage/ loss to shop due to fire, burglary, riot, strike, loss of money in transit, fraud committed by client's employees etc. The policy is meant for shops only, hence restaurants and tea /coffee shops cannot be insured under this insurance policy.

The risk covered is: Burglary - Protects contents of your shop against any loss or damage caused by burglary or attempted burglary. Burglary of cash in safe - Provides for losses resulting from the burglary of cash kept in safe. Cash in transit- Covers losses because of burglary of cash while it is being carried from the bank/ATM to your shop. Glass breakage - Covers loss or damage to any fixed plain glass caused by any accident, external and visible means. Damage to neon sign - Covers neon or glow signs displayed at your shop premises against damage caused by fire, accident, riot, and flood. Tenants legal liability - This cover provides for legal liability imposed on you by the property owner on account of damage to property by fire, earthquake, flood and riots. Employers liability - It provides for legal liability to your employees.

Exclusions:

Loss or damage in the shop due to natural calamities such as earthquake, cyclone, flood etc., is not covered by the insurance policy. If a family member of business staff is directly/indirectly involved in the actual theft of the shop, then the damage caused by the situation shall not be included in the policy cover. Some companies may charge extra money for the damage caused due to terrorist activity. Damage caused due to war, invasion, foreign enemy hostilities, civil war, mutiny, civil commotion, or nuclear activity is not covered by the insurance policy. If the property insured has been removed to another place for the purpose of renovation, cleaning or repairing, then the policy doesn't guarantee its coverage.

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For Eg: An accident took place at Mr. A shop in which he lost some of his equipments, glasses and signboard of his shop premises. He suffered total loss of Rs. 25000. But as he had shop insurance policy for his shop he can claim for the losses he suffered due to accident. So Mr. A had made a claim for the loss which he had suffered in accident. So by insuring the shop by shop insurance policy shopkeepers can claim for the losses/ damages like accidents, riots, burglary, forgery etc.

FACTORY INSURANCE:
Factory Insurance provides the protection to the businesses against the possible hazards like flood, theft, damage, fire etc. This insurance usually covers the buildings, plants, machineries, stocks. Also in addition to that employer's liability insurance, product liability insurance is covered within this policy.

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HEALTH INSURANCE:
Health insurance protects you and your dependants against any financial constraints arising on account of a medical emergency. Basically, the client pays a sum of money called the Premium and in turn the Insurance firm would commit to pay a predetermined sum of money to meet the customer's claims. Health insurance may be the most important type of insurance for anyone to carry.

The Risk Covered is: a) Hospital Reimbursement: Reimbursement of your hospital expenses in case of sudden illness, accidents or emergency surgeries and b) Hospital Cash Payout: Additional cash benefit for each and every completed day of hospitalization. c) Minimum 24hrs Hospitalizations.

Exclusions: a) Person suffering from Heart Diseases, High Blood Pressure, Diabetes, Obesity etc. b) Pregnancy.

For Eg: ABC person gets a Health Insurance Policy form Reliance General Insurance Co. Ltd. He goes for a Health Wise Plan: By paying Rs.5000 premium; gets insured Himself, His Wife & Child and got a cover of Rs.5 lakhs. After couple of months his child gets hospitalized due to malaria and was admitted for 2 days. In this case the Reliance General Insurance Co. Ltd. will settle the claim by reimbursing all the hospital bills.

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MOTOR INSURANCE:
Motor insurance (also known as auto insurance, car insurance, or vehicle insurance) is insurance purchased for cars, trucks, and other vehicles. Its primary use is to provide protection against losses incurred as a result of traffic accidents and against liability that could be incurred in an accident. Legally, no motor vehicle is allowed to be driven on the road without valid insurance. Hence, it is obligatory to get the vehicle insured.

The risk covered is: Undertake to reimburse the expenses incurred for repair or replacement of parts of the vehicle. To pay the market value of the vehicle in case of a total loss, provided that the originating cause of such damage is an accident, including theft. Loss or Damage to your vehicle against Natural Calamities like Fire, explosion, selfignition or lightning, earthquake, flood, typhoon, hurricane, storm, tempest, inundation, cyclone, hailstorm, frost, landslide, rockslide.

Not covered:

Normal wear and tear and general ageing of the vehicle. Depreciation or any consequential loss. Mechanical / Electrical breakdown.

For Eg: Suppose my vehicle may hit a tree causing 5 lakhs worth of vehicle damage and no personal injury. In these types of simple claims, the adjuster simple assesses the cost of damage and estimated amount is paid to me after completing the required paperwork.

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HOME INSURANCE:
Home insurance, also commonly called hazard insurance or homeowners insurance, is the type of property insurance that covers private homes. It is an insurance policy that combines various personal insurance protections, which can include losses occurring to one's home, its contents, loss of its use (additional living expenses), or loss of other personal possessions of the homeowner, as well as liability insurance for accidents that may happen at the home or at the hands of the homeowner within the policy territory. It requires that at least one of the named insured occupies the home. The home insurance policy is usually a term contracta contract that is in effect for a fixed period of time. The payment the insured makes to the insurer is called the premium. The insured must pay the insurer the premium each term. Most insurers charge a lower premium if it appears less likely the home will be damaged or destroyed

For Eg: A person owns a home worth Rs. 2000000 has insured it with ABC INSURANCE CO. He paid for Rs 30000 for 1 year. His part (wall) of home was destroyed by floods which insurance company valued it for Rs 100000, so he will be paid claim of Rs 100000 only.

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Non-Life Insurance companies:

Public Sector New India Assurance Co. Ltd. United India Insurance Co. Ltd. Oriental Insurance Co. Ltd. National Insurance Co. Ltd

Private Sector ICICI Lombard General Insurance Co. Ltd. Reliance General Insurance Co. Ltd. IFFCO Tokyo General Insurance Co. Ltd. Bajaj Allianz General Insurance Co. Limited TATA AIG General Insurance Co. Limited Cholamandalam General Insurance Co. Ltd. HDFC General Insurance Co. Ltd. Royal Sundaram Alliance Insurance Co. Ltd.

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Conclusion
At last we conclude that general insurance has a great importance in every ones life. General insurance covers the risk of loss. It is beneficial for business. If any unexpected incident occurs/happens one will get the claim if he has insured with the particular insurance company. The premium amount which is paid while buying a general insurance policy is not repaid after the maturity , so most of the people avoid buying insurance but they are unaware of the big loss that could occur in front of their small premium .so we recommend that it is necessary to buy general insurance which covers risk of related assets. So they should buy related general insurance products which insures there risk.