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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The reimbursement under the policy can be withdrawn on the event of death or maturity of the policy.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 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.