What is General Insurance?

“To insure is to protect and indemnify. It does not mean Prevention of loss”.

 General Insurance is a type of insurance policy that covers the financial loss suffered due to the loss or destruction of the insured asset. 

Insurance is our saviour from any unexpected situation that might disrupt our normal life and well-being. There are two types of Insurance, viz. Life Insurance and General Insurance. While people have slowly realised the importance of Life Insurance and have become aware of it, they are still unaware of the varied list of General Insurance products that cover a diverse range of risks. Thus, it is imperative to dive into the topic of General Insurance and understand the different types of General Insurance Policies available in the market.

Essentially, a general insurance policy covers only non-life risks. It has the following features:

• It is a policy or agreement between the policyholder and the insurer, which is considered only after the realization of the premium.
• The policyholder with a financial interest in the covered asset pays the premium.
• The insurer will protect the insured from financial liability in case of loss.

Almost everything under the Sun that you can call an asset can be insured. However, in India, General Insurance is majorly classified into the following types:

1. Health Insurance

2. Motor Insurance

3. Travel Insurance

4. Property Insurance

5. Commercial Insurance

6. Asset Insurance

7. Pet Insurance

8. Bite-Sized Insurance

1. Health Insurance

As the name says, this type of insurance covers the expenses incurred due to any illness or medical emergency. 

There are various types of health insurance available based on their coverage: 

• Individual Health Insurance: Covers one policyholder. 
• Family Floater Health Insurance: Covers the complete family under a single policy.  
• Group Health Insurance: Covers the employees of an organization. 

All the above types of health insurance further have different products under them based on     their usage and many other factors. Here is a list of major types of health insurance products available in India: 

• Senior Citizen Health Insurance
• Health Insurance
• Preventive Healthcare Plan
• Aarogya Sanjeevani 
• Super Top-Up Insurance
• OPD Insurance
• Personal Accident Cover

2. Motor Insurance

If you own a vehicle, you will know that motor insurance is mandatory in India. The policy ensures that the vehicle has complete protection against physical damage from natural or artificial calamities and third-party liabilities arising from the insured vehicle. 

Based on the type of vehicle they cover, Motor Insurance is broadly categorized into:

• Car Insurance
• Two-wheeler Insurance
• Commercial Vehicle Insurance

The different types of Motor Insurance Policies available in the market under the ones mentioned above are as follows: 

• Third-party insurance Policy: Pays the financial liability to the third party affected in the mishap, ensuring you do not face legal hassle due to the accident. 
  
• Comprehensive Insurance Policy: Apart from covering third-party liabilities, these plans also cover the expenses incurred for repairing the damages to the policyholder’s vehicle due to an accident, fire, artificial and natural calamities, riots and other such instances.
• Own Damage Policy: With Own Damage Cover, you receive the same benefits as a comprehensive policy without the third-party liability portion of the policy.

There are many add-ons covers that can be added to your motor insurance policy to ensure that you are covered against any eventuality. Some add-on covers you can avail of are - Zero depreciation cover, Loss of personal belongings cover, Pay-as-you-drive cover, Daily conveyance cover, etc. 

3. Travel Insurance

Travel Insurance provides financial protection to you and your family when you are visiting any place in the country or abroad. It covers emergencies like loss of baggage, loss of passport, hijacking, medical emergencies, delayed flights, accidental deaths, adventure sports etc. 

The major types of travel insurance are: 

• Domestic Travel Insurance: For travel within the country
• International Travel Insurance: For travel outside the country
• Student Travel Insurance: If you are moving abroad for higher studies. 

The above types further have a list of different products under them like Individual Travel Insurance, Family Travel Insurance, Senior Citizen Travel Insurance, Corporate Travel Insurance, Multi Trip Travel Insurance, Single Trip Travel Insurance and Schengen Travel Insurance.

4. Property Insurance

Another category of insurance is Property Insurance. A Property Insurance Policy provides financial reimbursement to the owner/renter of a building and its contents. It also covers damage caused to anyone other than the owner/renter if that person is injured on the property. 

Some products available in the market under property insurance include:

• Home Insurance: Provides financial coverage in case of any significant damage to the insured home due to any reason like fire, theft, flood, storm etc. 
  
• Shop Insurance: Covers the shop property and contents inside. 
• Burglary Insurance: Covers any loss or damage due to unlawful breaking and entering of insured premises.  
• Office Insurance: Office insurance provides coverage for the risks that can impact office operations like fire, burglary, misuse of office data, loss of money due to cheating of employees etc. 
• Fire Insurance: Provides coverage against damage caused by any fire to property or assets. 

5. Commercial Insurance

A Commercial Lines Insurance policy ensures that the business does not face any financial burden because of any financial and business risks. Apart from covering the damages to the property or employee injury, it also covers public or employer liability.

The policy is offered to commercial and business entities like large corporate houses, SMEs, and MSME industries.

Commercial Insurance, as an umbrella segment, has a number of Insurance types based on the type of asset covered, viz.:

• Liability Insurance: An insurance product that provides coverage against any claims resulting from injury or damage to any third party, i.e., person or property. It offers the following types of Liability Insurance Policies:
  • Directors and Office Liability Insurance 
  • General Liability Insurance 
  • Public Liability Insurance
  • Cyber Insurance

• Marine Cargo Insurance: This Insurance provides coverage for the inland transit of consignments. It covers the loss or damage of cargo or the means of its transportation between the point of origin and the final destination.

• Engineering Insurance: Engineering Insurance provides coverage against all risks associated with engineering and machinery. It includes the following insurance products: 
  • Contractor’s All-Risk Insurance
  • Erection All Risk Insurance
  • Plant and Machinery Insurance

• Workmen Compensation Insurance: Workmen Compensation provides financial coverage to employees who get injured or die in any mishap during work. Thus, Workmen Compensation Insurance not only helps the employers to compensate these employees but also to fulfil their ethical duty as an employer.

• Crop Insurance: As the name suggests, Crop Insurance is bought by agriculturists to cover the financial losses that a bad crop season, crop failure or any other related menace might bring in. 

Apart from the above major categories of General Insurance, there are a few more types as below: 

6. Asset Insurance

There is no denying the fact that modern-day devices are making our lives simpler, richer and smarter. However, in case of any damage, they are usually expensive to be repaired. As the name suggests, Asset Insurance provides financial coverage to your assets like Mobile TVs, and other appliances or electronics.   

7. Pet Insurance

The much-needed insurance cover for your furry babies because they need it as much as we do!

Pet Insurance provides financial coverage for your pet’s health and well-being requirements, such as any medical condition, such as pregnancy complications, dental treatments, and insect-borne diseases. Not just that, it also covers a lot of other conditions like pet theft, loss or damages to a third party because of the pet, accidents, overseas coverage and many more, depending on your insurance provider.  

8. Bite-Size Insurance

Bite-size Insurance, also known as small-ticket insurance/sachet insurance, is a non-comprehensive plan which focuses on specific needs. They are available at a lower premium and can be availed without documentation/tests. Since these insurance plans are specific, they have limited but focused coverage. In fact, Bite-Size Insurance is a category and not a type. It is unrestricted across all categories like health, travel, property etc. 

Below are a few common Bite-Sized insurance products available in the market:

• Online Fraud Protection
• Cab Ride Insurance
• Backpack Insurance
• Marathon Insurance, and many more.

Insurance is a concept that applies to a large group of people who may suffer the same risk in the same conditions or region. The money collected as premium from you by the insurer for availing an insurance policy goes into a big pool of funds where the premium paid by many other policyholders is also accumulated. In case, a policyholder faces a loss, the insurer covers the expenses from that pool.

Why do You Need General Insurance?

Any individual needs to have a general insurance policy owing to the risks posed by accidents, medical emergencies, natural calamities, and other unforeseen circumstances. The policy provides financial protection in case such situations arise in our lives. We cannot predict an accident or calamity; however, we can be better prepared to handle them.

Here are a few benefits that General Insurance provides:

• For most categories, having insurance coverage is compulsory by law. One example is the Motor Vehicles Act 1988, which made motor insurance compulsory. Thus, while following the mandatory regulation, you also ensure your beloved vehicle is financially protected.
• General Insurance Plans provide compensation against losses. Thus, across all categories, they serve one primary purpose: to provide financial protection and safeguard your savings in case any unfortunate situation arises.
• Many General Insurance Plans provide tax benefits. For example, the premium paid towards medical insurance offers tax benefits under Section 80D of the Income Tax Act.