Life with all its wonderful opportunities has its own share of hazards. Hazards and dangers with their variety and sudden improbability require strength and resourcefulness on one’s part so that they can be duly encountered. General insurance seeks to cover protection against different areas of hazards including property, enterprise, vehicle, money lending and various other forms of professional casualties, except the casualty of death.
Importance of General Insurance
Ensuring an agreement between the insurers and insured which forms the basis of its financial transactions, general insurance sells products and policies safe guarding various facets of property centric risks. It seeks to protect home or immovable properties against the various natural perils of fire, flood, storm, inundation and earthquake. It also covers risks pertaining to theft and burglary. Factory and its associated installations, along with breakdown of machinery may also come under the domain of general insurance.
Besides immovable property, even movable property comes under General insurance’s protective domain. There are general insurance products or policies covering the interests of automobile owners and those of cargo owners. Insurance against time bound damages caused naturally over time and those of theft, shipwreck and accidents where the insured had no direct role to play in its occurrence also come under its protective purview. There are particular policies seeking to protect the hulls of ships on account of their greatest exposure to risks.
Some of the areas related to general insurance are geared to benefitting individual personality. Commonly known as personal insurance, accident and health insurance are offered by such beneficial products without catering to the risk of death. Such insurance generally covers the cost of hospitalization by way of reimbursing the victims or at times give way to cashless hospitalization. It is important to note that accidental insurance and health insurance have enough products of different customizations to cater to the insurance of an individual or a group of individuals. For example employees working under an organization may come under its purview. Group insurance is cheaper because the insured can avail of discounts of various types.
Liability insurance catering to the liability of a third party comes into play when there is a risk to another person’s life or health on account of the owner’s property and the owner is legally bound to compensate Thus for meeting hazardous situations arising out of a legal course of action, liability insurance which is also a part of general insurance, becomes beneficial. Car owners, house owners, factory owners and medical practitioners may come under the domain of liability insurance. There are policies specially made keeping in mind the target group or groups of individuals whose business may come under the risk of legal suits. Even credit insurance seeking to protect the interests of private money lenders and financiers are protected by general insurance. To cater to contingencies arising in course of traveling requisite general insurance on part of travelers is known as travelers’ insurance. Pet insurance, an idea common in the west, seeks to cover the relative expenses involved with regard to the maintenance of pets and other domestic animals. Even the loss of pet is covered under this special branch of general insurance known as the pet insurance. Similarly there are insurances to cater to the risks of private as well as public event management groups.
Usually the actual value of the property, together with the anticipated value of loss is counted for the purpose of insurance cover. Accordingly the price and premium of a policy are determined. If the actual value of the property is not highlighted, as part of its risk calculation; in the event of its occurrence in reality, the owner will be required to pay additional premium. Actuaries- a special group of professionals play an important part as far as pricing and premium evaluation of a product related to general insurance is concerned. Most of the policies involve advance payment of premium; while only a few of them are adjustable with premium payment being dependent on annual profit turnover or average value of stock.
For every individual and all forms of property holders, general insurance is a must. Damage partial or complete may be
Difference between Life Insurance and General Insurance
While life insurance caters to risk of death and its consequent eventualities; general insurance seeks to protect risks posed by several aspects of life and its varied assets. In fact, any form of asset owner may be entitled for general insurance. Operational within the perspective of a country, there are different kinds of laws and statutes to guide and distinguish life insurance from general insurance.
General insurance catering to the areas of automobiles, property and enterprises are referred to as “standard lines” whereas insurance products serving to protect anything outside the aforementioned features are known as “excess lines”. Encapsulating the essence of insurance, general insurance like that of life insurance also revolves around an agreement between insurer and the insured. With adequate pooling in of funds as premium and its due investment, general insurance also serves the purpose of risk management by handing out respective claims. But general insurance usually involves a short term agreement between the insurer and the insured with the term extending not more than a year. Yearly payment of premium is another of its notable features.