General Insurance

General Insurance - Definition

The class of insurance which does not involve death as the main risk. It includes home, auto and many specialized commercial risks such as aviation, marine, boiler, etc. Also called "P&C" or "Property & Casualty" insurance.

It is also called non life insurance

Principles of General Insurance When the insured pays premium and the insurer accepts

the risk, the contact of insurance is concluded. The policy then issued is an evidence of contact.

The contact is completed when the proposer makes an offer and the insurer accepts the offer. The insurance cover note is treated as an acceptance of the offer.

The consideration for the insurer is the premium paid by the insured and for the insured is the indemnity promise made by the insurer

The people entering in to the contact must be competent and authorized to enter into contacts

The purpose of insurance should not be against public policy

Insurance & Assurance – Difference a life insurance policy provides cover for a set

period of time. If the worst were to happen during that time (and there are no complications), then the insurance company will be required to pay out the agreed sum to the beneficiary. The only time the policy has any real monetary value is if there is a claim made for payment as a result of an event triggering that claim, such as the death of the person covered. If the person outlives the term of the policy, then the insurance policy will cease and no payment will be made.

Insurance & Assurance – Difference Life Assurance is different from insurance, and will

always result in a payment. This is achieved by combining an investment element along with and an insured sum. This means that over time the value of the policy can increase as the investment bonuses are added. If a person covered by life assurance were to die, then the insured sum would be paid out, alongside the investment bonuses which would have accrued over time. If it is necessary to cancel the policy prior to the end of any designated term period, or the death of the life being covered, then once an investment bonus has been added, the life assurance policy will have an encashment value. It is therefore possible to cash in a policy earlier than its usual termination date, in order to collect on the investment portion. It should be noted that many insurance companies place penalties for cashing in policies early.

Main Types of General Insurance

Health Insurance Liability Insurance Motor Insurance Marine Insurance Property Insurance

Health Insurance

Individual/ Family Mediclaim Policy Domiciliary Hospitalization Family Floater Deferred Mediclaim Policy- For Retired Persons Small Covers for Lower Income Groups Cancer Insurance Group Mediclaim Policy- Employer Overseas Medical Cover- Journey Abroad

What is a Family Floater?

Family floater is a privilege offered to the client only in case he opts for "Group Mediclaim Policy". Unlike in an Individual policy, where a family (Husband/Wife) is covered for the desired Sum Assured , independent of each other, and pays the premium accordingly, in a Family Floater-The employees family is covered for a fixed amount and anyone in the family can avail/get Advantage till the limit is exhausted. The premium payable is calculated on the employee's age and a 20% loading is charged for every added person of the employees' family.

Individual / Family Mediclaim Policy - Hospitalization Policy covers both hospitalization and domiciliary hospitalization

expenses, as also treatment injuries caused by accident - boarding expenses, surgical fees, anesthetist fees, consultant’s fees, nursing expenses, OT Charges, diagnostic charges, medical appliances charges

To be eligible the claimant must be hospitalized for a minimum period of 24 hours. However , in case of Chemotherapy, Eye Surgery, Dental surgery, Kidney stone removal the condition can be waived

Expenses incurred 30 days prior to hospitalization and 60 days after hospitalization could also be covered

Claim amount cannot exceed the assured sum First year exclusion of pre-existing diseases

Mediclaim Policy - Conditions

Available to persons between 5 and 80 years of age. Children below 5 years can be covered if one of the parents is covered concurrently.

10% discount is available if entire family is covered Sum assured is increased by 5% for each year of claim

free insurance, subject to a maximum accumulation for 10 years.

Provision for health check up every 4 years Final claim must be filed within 30 days of completion of

treatment Sum assured- Rs.15,000 to Rs.5 lakhs - Domiciliary limit

up to 20% sum assured – Premium Exempted under 80D

Cash Less / Reimbursement Claim Settlement by TPA Cash Less – TPA pays to the Hospital

Concerned Reimbursement – TPA pays to the insured TPAs are private Third Party Administrators

who operate for several insurance companies and place their representatives at important hospitals for facilitating client services. They scrutinize the claims and make payment on behalf of insurers.

Deferred Mediclaim Policy Can be taken at any age between 25 and 55 or 60

( whichever is the retirement age) The amount of total benefit can be maximum of

Rs.50,000 during the life time and can not exceed Rs.20,000 for illness or injury

Policy does not cover pre and post hospitalization expenses

Policy comes into effect only on retirement Policy allows for a suitable refund of premium in case of

premature death of the insured The insured can increase the amount of cover anytime

until 4 years prior to retirement in multiples of Rs.10,000

Small Covers for Low Income Groups Sum assured is limited to Rs. 5000 and the

premium is very low Works like a usual mediclaim policy but does

not offer cumulative bonus or medical check-up facility

Cancer Insurance

Two group policies one by Indian Cancer Society (ICS) and the second by Cancer Patients’ Aids Association (CPAS) are available. Sum assured are Rs.50000 and Rs.2,00,000 respectively

The Insured has to be a member of either of these two, Viz., ICS and CPAS.

Both policies require Cancer Check- up prior to taking the policy

Policy covers only allopathic mode of treatment including cost of diagnosis, biopsy, surgery, chemotherapy, hospitalization and rehabilitation.

Group Mediclaim Policy

Available to any corporate, associate or a group of persons

Policy holder is the group and the premium is paid by the group. Individual members may enter or exit the group at any point of time

Cumulative bonus and health check-up facility not available

The insured is required to give complete list of persons covered under the policy from time to time

No change in sum assured is possible No refund for a person leaving

Overseas Mediclaim Cover

It covers medical expenses for illness suffered or accidental injuries sustained by Indians when traveling abroad on a work or for a holiday

Accompanying spouse and children who are going abroad will be treated as going for holiday travel

Cover is available up to 70 years of age. Beyond 70 years are admissible at extra premium

Policy does not cover pregnancy / childbirth, cosmetic surgery, routine physical examination

Policy covers various forms of treatment related expenses and also expenses of air transport of the remains in case of death and burial / cremation in India

Long Term Care Insurance

It is the delivery of medical and personal care other than hospital care to people suffering from chronic diseases. Due to improved medical services, the mortality rates have come down and people are living for longer time than before

Elderly people after reaching certain age do not remain in a position to take care of themselves and thus require long term care.

Thus long term care is an area of financial planning which should not be neglected

Premium would depend on family history, availability of caring members in family etc

The person should select this policy when he is healthy at 50 or 60 when he has other family members available to take care of him/ her

Disability Insurance

This insurance helps when the sole earning member of the family becomes sick / disable for an extended period

Employers provide this facility at advantageous rates

It is voluntary and the premium has to be paid by the insured

Insurance Company pays monthly up to 60% of monthly salary

Cover can be taken for a short period or for a life time

Liability Insurance / Indemnity Policies Employee Liabilities : Those related to working

conditions and are covered under workmen's compensation insurance policies

Employee State Insurance : covers injury to an employee while at work

Non Industrial Risks : Risks faced in case of commercial ( non-industrial) enterprises such as Cinemas, Restaurants, Offices, Shopping Complexes, Schools, Exhibitions & Fairs etc

Liability Insurance

Professional Liabilities : Liabilities arising out of practice of a particular profession. Doctors, Engineers, Architects, CAs, Directors of Companies, Lawyers and solicitors are covered under this group

Product Liabilities : These are liabilities that could arise from the sale of products to customers and resulting damage to any customer due to a fault in the product.

Motor Insurance Covers

Any liability arising in respect of death or bodily injury to any person including the owner of the vehicle or his authorized person in the carriage

Damage to any property or third party ( man on the street)

Liability incurred in respect of death or bodily injury of any passenger of a public service vehicle

Liability arising out of Workmen’s compensation act – to Driver / Conductor / Cleaner

Liability to Hired / contact employees ( Drivers etc)

Motor Insurance

Injured party / Insured will not have to prove any fault in order to claim the amount under this policy. This is known as “no fault” liability

Sum limited is Rs.50000 in case of death, Rs.25000 in case of permanent disability and Rs. 6000 in case damage to property

There are two types of policies : 1. Third Party Liability Policies or the “Act Liability” policy and 2. Comprehensive policy or Own Damage & Act Liability Policy

The insured’s liability for damage to property of third parties is limited to Rs.6,000, while liability for death of or bodily injury to third party is unlimited.

Motor Insurance

The legal costs and expenses by third parties are also reimbursable in certain cases

The risk covered under comprehensive policy are fire, burglary, earthquake, flood etc, terrorist activity, malicious acts, riot & strike etc

Exclusions include mechanical breakdown, wear & tear, depreciation, damage of tyres etc

No claim bonus is provided while paying annual premium Premium is paid only on the depreciated value In case of commercial vehicles, the insured has to bear

Rs.1500 in respect of each accident compulsorily. Such a practice is called Compulsory Excess and deducted from claim for repairs

Marine Insurance ( Household Goods in Transit) Item wise details of goods with their original purchase

price and date of purchase to be mentioned at the time of getting the policy

Damage should be reported on receipt of goods on damaged condition to the transporter

Insurance company also should be informed to appoint a surveyor immediately

Surveyor would inspect damaged goods and take their photographs showing the nature of damage

An estimate each to be obtained for the cost of repair of partially damaged goods and replacement of fully damaged goods net of scrap value / salvage valuefrom carpenters, scrap buyers

Marine Insurance

Based on this estimates the surveyor would make an assessment of damage and provide a survey report indicating the amount of claim which could be admitted along with his own survey charges.

The insured has to then lodge a claim on the transporter for the assessed amount and get his acknowledgement

The insured would send to the insurer original policy, bill of lading, invoice of goods, survey report, claim bill, letter of subrogation etc

The insurance company would settle the claim after getting an acknowledgement of the insured

Property Insurance

Home Insurance covers natural and man-made calamities., Fire, Earthquake, Lightning, Floods, Explosion of gas cylinder, Spread of Fire due to short-circuit ,Riot, Strike, Malicious damage, Aircraft laws, Impact from rail/ road vehicles, Storm, Cyclone, Flood, Landslide, Burglary & Terrorism

Property insurance

The value of a home structure is assessed as per the area of home multiplied by the rate of construction per. sq. feet, as on the date of taking the policy. For example, if your home is 1000 sq. feet and the construction rate per sq. feet is Rs. 800/-, then the sum insured for your home’s building structure is Rs. 8,00,000.

On the other hand, the contents are assessed on the market value of the items. This means that if there were a loss, the claim would be paid on the value of purchasing a similar new item, less depreciation for the usage.

Property Insurance

A comprehensive Home Insurance policy also covers :Household appliances, Jewellery Furniture & fixtures, Personal items at your home Against fire and allied perils like earthquake, terrorism and burglary.

The premium can be lower if you insure for a long period ( 10 years) by making one initial payment

Property Insurance

Property should be insured for full value. Otherwise the insurance company will settle the claim only proportionately

The principle is known as “coinsurance”. If the property is not fully covered, the insured will be regarded as a coinsurer and bear a part of the loss.

Willful negligence not covered

Tata AIG to Insure HNIs’ Jewellery & Valuables Tata AIG General Insurance has launched “Jewllery &

Valuables” insurance through its home insurance products. This product is mainly targeted at high net worth individuals (HNIs). The insurer has designed a special division called private client group, which would be offering these services. Whether it is their fleet of high-end cars, homes, fine art, jewellery, rare antiques or just about anything else they value, the company aims to insure every aspect of their private collection. This product would also reimburse loss of value occur during repair and restoration of its clients’ valuables.

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