1.1.
Different types of General Insurance
As stated earlier General Insurance currently covers most of the risks that we are subjected
to. However, the major type of General Insurances are as under:
1.5.1 Fire Insurance
Fire insurance is a contract under which the insurer in return for a consideration (premium)
agrees to indemnify the insured/assured for the financial loss which the Insured may suffer
due to destruction of or damage to property or goods, caused by fire, during a specified
period.
Thus the basic ingredients of Fire Insurance are as follows:
i. The financial loss should be on account fire resulting in damage or destruction of
property or goods.
ii. The maximum amount which the Insured can claim as compensation in the event of
loss is agreed to between the parties at the time of entering into the contract.
It should be understood here that the event that results into financial loss would be fire and
not accident.
1.5.2 Marine Insurance
Marine Insurance is an Insurance against loss or damage or destruction of Cargo, freight,
merchandise or means or instruments of transportation whether by sea, land or air.
Thus marine insurance provides indemnity for loss or damage to ship, cargo or mode of
transport by which the property is taken, acquired or held between the point of Origin and
point of destination.
1.5.3 Motor Vehicle Insurance
Motor Vehicle Insurance, also referred to as ‘Automotive Insurance’, is a contract of
Insurance under which the Insurer indemnifies the Insured, who is the owner or an operator
of a Motor Vehicle, against any loss that he may incur due to damage to the property (i.e.
the Motor Vehicle) or any other person (i.e. Third Party) as a result of an accident.
There are two types of Motor Vehicle Insurance:
a. Mandatory
In India it is mandatory ie required by Law, for every owner or operator of a Motor
Vehicle to take insurance that provides for payment of compensation to a Third
Party who dies or suffers injuries due an accident caused by the said motor vehicle.
Thus the objective of such a policy is prevention of public liability to protect the
general public from any accident that may take place on the road.
It may be noted here that in Insurance the Insured is the First Party, the Insurance
Company is the Second Party and all other are third parties.
Such a policy is also known as ‘Act Only’ Policy as it is mandatory by Law.
b. Comprehensive
Under a comprehensive motor insurance policy apart from the coverage of Third
Party Liability ( as provided in the mandatory policy) various other risks are also
covered. These include damage to the Motor Vehicle caused by fire, accident, theft
etc.
As a single policy is issued to cover all risks, such type of policy is called
Comprehensive Policy.
1.5.4 Health Insurance Policy
The Health Insurance or Medi Claim Policies, as it is also referred to, are those policies
which cover hospitalization expenses for the treatment of illness/ injury as per the terms
and conditions of the policy.
These policies may also cover pre hospitalization expenses prior to hospitalization and also
post hospitalization expenses for the period specified in the policy.
Some of the Insurers also cover the following expenses in this policy:
a. Ambulance Charges
b. Day Care treatment charges i.e. treatment by using advanced technologies when
even 24 hours of hospitalization is not required.
1.5.5 Personal Accident Insurance
The purpose of personal insurance is to provide for payment of a fixed compensation for
death or disablement resulting from injury to the body of a human being caused due to an
accident.
Thus under the contract of personal accident insurance if at any time during the tenure of
the said contract or policy, the insured (i.e. the person who has taken the policy) sustains
any bodily injury resulting from an accident, the Insurer shall pay to the insured or to his
legal representatives, as the case may be, a specified sum in the event of specified
contingencies such as permanent disability, death etc.
1.5.6 Burglary or Theft Insurance
Theft Insurance Contract covers losses from burglary, robbery and other forms of theft.
Theft generally refers to the act of stealing. Burglary is defined to mean the unlawful taking
of the property within the premises that have been closed and in which there are visible
marks evidencing forceful entry.
