Types of General Insurance
All About General Insurance in India
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 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The reimbursement under the policy can be withdrawn on the event of death or maturity of the policy.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 Digit’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
| General Insurance | Life Insurance | |
| Applicability of claim | 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). | 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 | 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. | 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 | 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. | 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 | 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. | 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 | 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. | 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. |
Types of General Insurances in India
Almost everything is insurable. However, General Insurance in India is bifurcated as Fire, Engineering, Marine and Miscellaneous Insurance.
Let us look at them as per the use and general acceptability. Following are the different types of General Insurances in India:
- Health Insurance
- Travel Insurance
- Motor Insurance
- Marine Insurance
- Home Insurance
- Commercial Insurance
Digit Insurance also offers insurance policies for Mobile, Bicycle, Shop Protection, and others.
1. Health Insurance
The Health Insurance cover from Digit offers protection for the medical expenses incurred due to hospitalization caused because of an accident or illnesses.
Although every policy is different, based on who it's being purchased for, it mainly covers:
- Accidental Hospitalization (pre & post)
- Accidental illness and hospitalization
- Daycare procedures
- Psychiatric Support
- Annual Health Checkups
- Daily Hospital Cash
The cover can be extended to cover the following with some predefined conditions:
- Maternity benefit with Infertility benefit
- Critical Illness
- Organ Donation
- AYUSH (Alternate Treatment)
The premium for the health insurance is charged on the basis of:
- Age
- Pre-existing illness
- Lifestyle Habits
- Type of coverage
- Your family health history
2. Travel Insurance
Travel Insurance covers your financial liability, if any, when you travel within or beyond the Indian boundaries. The financial liability may arise due to medical or non-medical emergencies.
The duration of the travel for one time can be 180 days at the maximum. The policyholder can take more than one trip in a year. Your Travel Insurance will cover:
- Loss of Baggage
- Loss of Passport
- Hijacking
- Medical Emergencies
- Delayed Flights
- Accidental Deaths
- Adventure Sports
Digit’s Travel cover comes with worldwide support and special features like:
- Zero Deductibles.
- Smartphone enabled claim process.
- Customized Travel Plan Cover.
- Missed call claim facilitation.
3. Motor Insurance
A Motor Insurance Policy is mandatory to be able to drive legally in India. Broadly there are two types a) Third-Party Liability b) Comprehensive Package Policy.
A Third-Party Policy covers for losses faced in a situation where your vehicle damages any third-party such as a public property, person or third-party vehicle. The same is the minimum requirement to be able to drive legally in India, as stated by the Motor Vehicles Act.
A Comprehensive Package Policy covers both third-party damages and liabilities and damages/losses caused to you and your own vehicle. The losses may arise due to an accident, theft, fire, natural calamities, and others.
Digit Insurance provides some add-ons under its Comprehensive Package Policies for Cars and Bikes that act as additional shields to your vehicle, such as:
- Tyre Protect Cover
- Zero Depreciation Cover
- Return to Invoice
- Engine and Gearbox Protection
- Breakdown Assistance Cover
4. Home Insurance
You build your home with your toil and hard earned money. Everything you buy is a priceless possession for you and hence it needs to be protected.
A Home Insurance Policy protects your valuable and other assets. It is a comprehensive package policy that covers all valuables.
Digit Insurance gives protection for Home against Burglary, Loss/Damage of Jewelry, Fire and Natural Disasters.
5. Commercial Lines
The lines of insurance that affects the business operations in the real terms are categorized under the Commercial Lines of Insurance. Type of the insurance covers that one can buy may include:
- Property Insurance
- Engineering Insurance
- Liability Insurance
- Marine Insurance
- Employees Benefit Insurance
- Business Interruption
Depending on the type of occupation, risk exposure, and the money involved, the insurance could be different for each industry or business.
For example; an insurance that is specific to a cement plant, versus one for an IT company will be different. The premium charged for a cement plant will be higher than a showroom of air conditioner.
Therefore, Insurance is completely based on the level of the risk exposure. A worker in the cement plant is more prone or susceptible to injury than to the one who is working in the showroom.
6. Mobile Insurance
Simple as it reads. A mobile insurance protects the phone from accidental damage. Under the mobile protection cover, Digit Insurance compensates for repair of accidental screen damage to your phone.
The buyers can have mobile insurance for both an old or new phone. Very affordable insurance protection for the most expensive phones you buy.
7. Bicycle Insurance
Not just the cars and two wheelers, people are now passionate for expensive bicycles also. Call it a fashion or change of lifestyle, Bicycle Insurance is another sought product these days. Digit Insurance offers cover against Personal Accident, Theft, Accidental Damage, and Hospital woes.
“Insurance is to manage Cash Flow after a loss occur”.