What is general insurance
When you hear the word insurance, the first word that comes to your mind is life insurance. But other insurances do not cover life and instead protect your tangible assets and your health. This is known as general insurance. Let us understand this area of insurance in detail.
What is general insurance?
Let us start with understanding what is general insurance. A general insurance policy covers you against the loss or damage to your tangible assets. It is an agreement between the insurer and insured where the former insures assets and covers the loss of your valuable assets from theft, fire, burglary and other unforeseen accident.
Features of general insurance
Many people need clarification on general and life insurance. The primary difference is that one covers life, and the other does not. However, the following are the main features of general insurance that differentiate it from life insurance.
• It covers non-life assets.
• This is in no way a saving plan with assured returns.
• You enter into an annual contract with the insurer and pay the premium for the year in one go. However, you can get into a longer-duration contract with your insurer, like 2 or 3 years.
• In case of any insurable event like theft, accident, fire or flood, the entire sum insured or the insurance company pays the coverage amount.
Types of General Insurance Policies
After understanding this kind of insurance, it is also essential to understand the types of policies under this insurance to ensure you are aware of and cover all your non-life assets.
1. Health Insurance
Health is wealth, the first aspect that needs protection before everything else. This policy helps cover the cost of treatment and hospitalisation expenses in a medical emergency. Under health insurance, there are two kinds of policies: an indemnity health insurance plan and a fixed benefit health insurance plan.
An indemnity health insurance plan covers all expenses incurred in treatment when hospitalised. In contrast, a fixed benefit health plan pays the entire sum insured as soon as the insured event occurs, such as a personal accident or critical illness.
2. Motor Insurance
A motor insurance policy covers the liability, loss and damage to the car in case of an accident. According to the Motor Vehicles Act of 1948, it is mandatory to have a valid third-party-only motor insurance plan for plying your vehicle on Indian roads.
Now, in India, there are three types of motor insurance plans, such as:
a. Third-party liability plans:
Which covers only the third-party legal liability of the vehicle in case of an accident for damages done to a third-party vehicle, person or property. This type of plan is mandatory in India for all vehicles.
b. Comprehensive plans:
This covers the third-party legal liability of the vehicle and any damages done to your vehicle.
c. Standalone own-damage plans:
This covers only the damages done to your vehicle and can be taken only if you have a valid third-party liability plan.
3. Travel Insurance
This policy covers financial risks that can arise during domestic or international travel. The purpose of travel is open to the policy and the coverage. But with delayed flights, lost baggage, and medical exigencies, this policy is a must when travelling.
4. Home Insurance
In case of any damage to the house, this policy covers the financial loss that is incurred. The structure of the house and the home contents are all covered in the policy. Any damage to the structure due to a natural calamity is covered in the policy which offers relief in case of an unforeseen calamity.
5. Commercial Insurance
A business also faces different kinds of risks during its operations. These risks are covered under the head of commercial insurance. Some of the policies available in this are:
• Fire insurance
• Property insurance
• Liability insurance
• Marine insurance
• Workmen compensation
• Business interruption
• Loss of profit.
For anyone holding assets, it is essential to know what is general insurance. Once you understand and know the benefits, you must know the types of general insurance policies available. With this clarity you will understand the risks involved with all your tangible assets and accordingly get them covered to avoid any financial strain.
Disclaimer: The content provided is for education and informational purpose only, none of the information contained in our blog amounts to any form of opinion or advice. Please go through policy related documents carefully or consult an expert before making any insurance-related decisions.