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.
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.
Types of General Insurances in India
Almost everything is insurable. However, General Insurance in India is bifurcated as Fire, Engineering, Marine and Miscellaneous Insurance.
Let us look at them as per the use and general acceptability. Following are the different types of General Insurances in India:
