There are many things in life that are as important to us as ourselves, if not more. While we take care to insure and protect our lives with a life insurance, it is equally important for us to protect these important things in our life too.
Be it our health, our dream home, our precious vehicle or our cherished holidays, General Insurance covers them all. In other words, it covers all forms of insurance except life.
General Insurance not just provides insurance for property against fire, burglary or theft; personal insurance covering health, travel and accidents; and liability insurance covering legal liabilities; it also includes insurance against errors and omissions for professionals, credit insurance providing payments depending upon the loss from a particular financial event and much more.
What differentiates General Insurance from life insurance is that unlike the latter policies, the tenure is normally not that of a life time. The usual term lasts for the duration of a particular economic activity or for a given period of time; most of them being annual contracts, there are a few which have a longer term as well.
Types of General Insurance:
Wide encompassing and not just too general as its name suggests, should we not understand its different categories:
Motor Insurance: Mandatory in India as per the Motor Vehicles Act, 1988, Motor Insurance can be divided into three groups: two and four wheeler vehicle insurance, and commercial vehicle insurance.
Providing protection to the owner of the vehicle against (a) damage to the vehicle and (b) any third party liability determined by law against the owner of the vehicle, it covers all damages and liability of a vehicle against on-road and off-road emergencies.
With benefits including roadside assistance, cashless servicing at workshops and garages, towing assistance, personal accident cover, comprehensive policies even provide insurance against damage caused by natural and man-made calamities, including acts of terrorism.
Health Insurance: Covering medical and surgical expenses of the insured individual due to hospitalisation from an illness, the common types of health insurance includes individual health insurance, family floater health insurance, surgery cover, comprehensive health insurance and critical illness insurance.
With health care costs increasing every year with sedentary lifestyle and stress at work, this covers critical illness and medical emergency often including cashless facility at empanelled hospitals, pre and post hospitalisation expenses, ambulance charges, daily cash allowances etc., thus helping to mitigate the financial risk and guaranteeing a peace of mind in times of crisis.
Travel Insurance: This covers against unseen medical and non-medical emergencies during overseas travel. It can be broadly grouped into: individual travel policy, family travel policy, student travel insurance, and senior citizen health insurance.
It helps to ensure a worry free travel experience during International travel, whether on vacation or business, which can turn into a nightmare if one experiences contingency like loss of baggage or passport, flight delays, medical emergencies etc., that can take away all the fun from the holidays, by protecting the insured against misfortunes while travelling.
Home Insurance: Home insurance protects and secures the physical structure of our home and its contents against natural calamities and manmade disasters and threats, providing protection against risks and damages from fire, burglary, theft, flood, earthquakes etc.
It helps to safeguard our most treasured possession and the largest financial investment we make in our life, thus ensuring that our hard earned money is used to meet important needs instead of rebuilding the house if some harm comes to it.
Marine Insurance: Marine cargo insurance covers goods, freight, cargo, and other interests against loss or damage during transit by rail, road, sea and/or air from the time they leave the seller’s premises till it reaches the buyer’s premises, offering complete protection during transit and compensation in the event of any loss. Most common types are Open Cover, Open Policy, Specific Voyage Policy and Annual Policy.
Business involves import and export of goods, within national borders and across international borders which carry an inherent risk of mishaps resulting in damage and/or destruction of goods, leading to substantial financial loss and this insurance helps mitigate that risk.
Commercial Insurance: Commercial insurance encompasses risk coverage solutions for all sectors of the industry arising out of business operations providing insurance solutions for all industries and sectors.
It provides insurance cover against operational loss to small and medium scale enterprises, large corporates as well as multinational companies.
Rural Insurance: It meets the needs of agriculture and rural business. IRDA has specified annual targets to insurers to provide insurance to rural and social sector and hence providing this insurance is a mandatory requirement for all general insurance companies.
Insurance companies have to achieve yearly targets with respect to policies underwritten and gross premium income in percentage terms and in terms of number of lives under social obligation.
Claim Process for general Insurance:
It is easy to sell but it’s difficult to provide after sales service. Claim settlement is what decides how good an insurer really is. Three factors which need to be kept in mind by the person intending to get insured are:
Claim settlement ratio: Number of claims settled to the total number of claims filed in a financial year.
Insured Claim ratio: Total amount spent on claims to the total amount earned as premium in a financial year
Claim Settlement Turnaround time: Time span between the filing of a claim and settlement of a claim.
Tax benefits are available only for health insurance. Section 80D of the Income Tax Act, 1961 provides deduction for premium payment up to Rs.25000 for self and family and Rs.30000 for senior citizens, thus entitling a total of Rs.55000 per year
The premium paid for other forms of insurance, which are for business purposes, can be claimed as fully allowable business expenditure.