Protects against the likely loss due to unwanted incidents in monetary terms.
The Insurance protects against the loss likely to be suffered due to unwanted incidents in monetary terms. It is necessarily a contract between the insurance company and buyers of Insurance products. It has all the ingredients of a contract like Offer, Acceptance, and Consideration. The insurance company makes an offer to the customer and the customer accepts it and pays the premium as consideration.
The Insurance company that offers insurance products is called INSURER and the person who buys the insurance product is called INSURED.
The insurance is categorized into two categories namely LIFE Insurance and NON-LIFE Insurance or GENERAL Insurance. As the name suggests, Life Insurance covers the life of a person whereas General Insurance covers the risk attached to non-life objects like properties, vehicles, travels, and other valuables, etc.
Type Of General Insurance Policies
It covers Car, Motor Bike, Commercial Vehicle, etc against the loss occurred due to fire, burglary, or accidents.
It covers an individual against the illness or disease. It also covers critical illnesses like Cancer, Cardiac problems, etc
It covers the loss that occurred due to the fire in case of Vehicle, Stock, house property, etc.
It covers the home and its contents against the Fire and burglary of its contents.
It provides the covers against the risk associated with travels like accidents, loss of baggage, illness, etc. This type of insurance is popular for traveling abroad.
It covers the risk associated with a sea voyage. This popular in the case of exports of goods through the sea.
General Insurance Benefits
Financial Security
General insurance protects the financial losses and damage to the policy holder’s valuables and assets, that may have caused due to theft, burglary, terrorism, natural disasters like floods, earthquakes, etc.
Tax Benefits
Your general insurance policies and life insurance policies have tax benefits. Health insurance tax benefits in India allow citizens to avail are benefits under section 80D. Senior Citizens, aged above 60 years of age are allowed a tax deduction of Rs. 30,000.
Mental Peace
The insurance policy provides coverage against third-party liability, personal accidents, protection against theft, burglary, terrorism, natural disasters, and risks related to any business. Certain policies also take care of your family and loved ones when you’re not around thus ensures mental peace and makes you worry-free.
Principles of Insurance
There are seven cardinal principles of Insurance, which are the foundation stone of the contract of Insurance.
- The principal of Uberrimae Fidei (Utmost Good Faith)
It is expected from the insured that the information furnished by him is true and correct about the subject matter of insurance. The Insurance company is liable to pay only when the correct information has been furnished to them. - The principal of Insurable Interest
The Insured should have some interest in the object of insurance. The owner of the Car has an insurable interest in Car or the owner of the house in the house property. - Principal of Indemnity
Insurance indemnifies against the losses suffered due to untoward incidents. It will restore the same position as it was before the accident. Insurance is not for making the profit. - Principal of contribution
The insurance company is liable to pay their part of the contribution only. If a person has obtained Health insurance of Rs 4 lakhs from two insurance companies and in case of a claim of Rs 4 lakhs each company will pay Rs 2.00 lakhs each, not Rs 4.00 lakhs each. - The principle of subrogation
After payment of a claim, the ownership of the insured property transferred to the insurance company. In case of the total damage of a car, the insurance company gets the ownership of Car after payment of a claim. - The principal of Loss Minimisation
It is the responsibility of the insured to minimize the loss in case of any mishappening. In case of fire, the insured is expected to take all steps to douse off the fire. He can not simply sit just because he has taken the insurance. - Principle of Causa Proxima (Nearest Cause)
In case of multiple causes of mishappening the nearest cause will be taken into account to decide the liability of the insurance company. In case a car catches fire after meeting an accident. The fire could be taken as a cause of loss.