What is General Insurance?
Insurance other than 'Life Insurance' falls under the category of General Insurance. General
Insurance comprises of insurance of property against fire, burglary etc, personal insurance such as
Accident and Health Insurance, and liability insurance which covers legal liabilities. There are
also other covers such as Errors and Omissions insurance for professionals, credit insurance etc.
Non-life insurance companies have products that cover property against Fire and allied perils, flood
storm and inundation, earthquake and so on. There are products that cover property against burglary,
theft etc. The non-life companies also offer policies covering machinery against breakdown,there are
policies that cover the hull of ships and so on. A Marine Cargo policy covers goods in transit
including by sea, air and road. Further, insurance of motor vehicles against damages and theft forms
a major chunk of non-life insurance business.
In respect of insurance of property, it is important that the cover is taken for the actual value of
the property to avoid being imposed a penalty should there be a claim. Where a property is
undervalued for the purposes of insurance, the insured will have to bear a rateable proportion of
the loss.
For instance if the value of a property is Rs.100 and it is insured for Rs.50/-, in the event of a
loss to the extent of say Rs.50/-, the maximum claim amount payable would be Rs.25/- ( 50% of the
loss being borne by the insured for underinsuring the property by 50% ). This concept is quite often
not understood by most insureds.
Personal insurance covers include policies for Accident, Health etc. Products offering Personal
Accident cover are benefit policies. Health insurance covers offered by non-life insurers are mainly
hospitalization covers either on reimbursement or cashless basis. The cashless service is offered
through Third Party Administrators who have arrangements with various service providers, i.e.,
hospitals. The Third Party Administrators also provide service for reimbursement claims. Sometimes
the insurers themselves process reimbursement claims.
