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Chapter: 11th Commerce : Insurance

Types of Non-life Insurance (or) General Insurance

It can be classified into: (i) Fire Insurance; (ii) Marine Insurance; (iii) Health Insurance and (iv) Miscellaneous Insurance.

Non – Life Insurance

 

It refers as the insurance not related to human but related to properties.

 

A. Fire Insurance


Fire insurance is a contract whereby the insurer, in consideration of the premium paid, undertakes to make good any loss or damage caused by a fire during a specified period upto the amount specified in the policy.

A claim for loss by fire must satisfy the following two conditions:

·           There must be actual loss; and

·           Fire must be accidental and non- intentional.

Essential elements of Fire Insurance Contract

·           The insured must have insurable interest both at the time of insurance and at the time of loss.

·           The contract is based on the principle of utmost good faith.

·           It is based on the principle of strict indemnity.

·           Fire must be the proximate cause of damage or loss.

 

B. Marine Insurance


Marine insurance is a contract of insurance under which the insurer undertakes to indemnify the insured in the manner and  to the extent thereby agreed against marine losses. The insured pays the premium in consideration of the insurer’s (underwriter’s) guarantee to make good the losses arising from marine perils or perils of the sea.

Marine perils can be collision of ship with the rock, fire, ship attacked by the enemies, etc. These perils cause damage, destruction or disappearance of the ship and cargo and non-payment of freight. Through marine insurance policy, the insurer undertakes to compensate the owner of a ship or cargo for complete or partial loss at sea.

Essential elements of Marine Insurance Contract

·           It is based on the principle of indemnity

·           The contract is based on utmost good faith.

·           The insurable interest must exist at the time of loss.

·           The principle proximate cause will apply to marine loss only.

 

Types of Marine Insurance Policies

The three different types of marine insurance policies are:

 

1. Hull or Ship Insurance:

When a ship is insured against any type of danger, it is known as hull insurance. This policy is taken to indemnify the insured for losses caused by damage to ship.

 

2. Cargo Insurance:

When a marine insurance policy is taken by the cargo owner to be compensated for loss caused to his cargo during the Voyage, it is known as cargo insurance. The cargo to be transported by ship is subject to many risks, like risk of theft, loss of goods in voyage, etc.

 

3. Freight Insurance:

When a marine insurance policy is taken to guard against non-recovery of freight, it is known as freight insurance. The shipping company is mainly interested in freight, which it gets either in advance or on the arrival of goods. However, it will not get the freight, if the goods are lost during transit. So, to insure the freight, it takes freight insurance.

A contract of marine insurance covers the ship, cargo and the freight.

 

C. Health Insurance

In mid 80’s, most of the hospitals in India were government owned and treatment was free of cost. With the advent of Private Medical Care, the need for Health Insurance was felt and various Insurance Companies introduced Health Insurance as a Product. Presently the health insurance exists primarily in the form of ‘Mediclaim policy’.

Health insurance policy is a contract between  an  insurer  and  an  individual or group, in which the insurer agrees to provide specified health insurance at an agreed upon price (premium).Disability resulting from illness or accident may be peril to family because it not only  cuts  off income but also creates large medical expenses. Health insurance is taken as safeguard against rising medical costs. It provides risk coverage against unforeseen health expenditure that may result in financial hardship.

 

Types of Health Insurance

There are mainly three types of Health Insurance covers:

 

1. Individual Mediclaim

It covers the hospitalization expenses for an individual up to the sum assured limit

 

2. Family Floater Policy

It covers the hospitalization expenses for entire family up to the sum assured limit.

 

3. Unit Linked Health Plans

This policy combines health insurance with investment and pays back an amount at the end of the insurance terms.

Health Insurance provides following types of coverage:

Medical expenses – It covers the expenses of hospitalization/nursing home bills and doctors’ services.

Disability income – It replaces the income lost while the insured is unable to work.

 

claims Settlement


There are two ways by which health insurance claims are settled:

a. Cashless: The claim amount needs to be approved by the TPA and the hospital settles the amount with the TPA. (TPA or Third Party Administrator is a middleman between Insurer and the Customer)

b. Reimbursement: The insured avails himself or  herslef  of  the  treatment and settles the hospital bills directly at the hospital. The insured can claim reimbursement later on by submitting relevant bills/documents for the claimed amount to the TPA 


D. Miscellaneous Insurance

 

i. Motor Vehicle Insurance

This is also known as ‘Auto Insurance’. This policy comes under General Insurance. This insurance has become very popular and is gaining importance. In motor insurance the owner’s liability to compensate people who were killed or injured through an accident is passed on to the  insurance  company. The premium rate under this policy is standardized.

 

ii. Burglary Insurance

This policy comes under the category of insurance of property. Any loss of damage due to theft, larceny, burglary, house- breaking and acts of such nature are covered by this policy. Compensation of actual loss is done.

·           Insurable interest need not exist at the time of policy but should be present at the time of theft.

·           The principle of causa proxima is also applied to it. The insurance company would pay only if the proximate cause falls under the policy

 

iii. Cattle Insurance

This is a bond in which a sum of money is secured to the insured in case of an event of death of animals like bulls, buffaloes, cows and heifers. The cause of death may be an accident, disease or pregnant condition, etc. The insurer normally agrees to pay excess in case of loss.


 

iv. Crop Insurance

This policy is to provide financial support to farmers in case of a crop failure due to drought or flood. It generally covers all risks of loss or damages relating to production of rice, wheat, millets, oil seeds and pulses etc.

 

v. Sports Insurance

This policy is a comprehensive cover for amateur sports persons regarding their sporting equipment, personal effects, legal liability and personal accident risks. If desired it can also be extended to a named member of the insured’s family but it is not available to professional sports person. The cover is generally for following sports or more: Angling, badminton, cricket, golf, lawn tennis, squash and use of sporting guns.

 

vi. Amartya Sen SikshaYojana

The General Insurance Company offers to secure the education of dependent children under this policy. If the assured parent/legal guardian goes through any bodily injury resulting solely and directly from  accident  due to external, violent and visible means and if such injury shall within twelve calendar months of its occurrences be the only direct cause of his/her death or permanent total disablement, the insurer shall indemnify the insured student in respect of all covered expenses to be incurred from the date of occurrence of such accident till the expiry of policy or completion of the duration of covered course whichever occurs first and such indemnity shall not exceed the sum assured as stated in the policy schedule.

 

vii. Rajeswari Mahila Kalyan Bima Yojana

This policy envisages to provide relief to the family members of insured women in case of their death or disablement due to any kinds of accidents and/or death and /  or disablement arising out of other factors incidental to women only.

 


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11th Commerce : Insurance : Types of Non-life Insurance (or) General Insurance |


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