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A General Insurance policy is a non-life insurance product that provides coverage for people, assets or entities other than the death of the insured. The policy offers payment to the policyholder based on the loss incurred from a specific financial event. Common forms of general insurance in India are insurance for automobiles, mediclaim, homeowners, marine, travel, and others. Basically, general insurance is insurance that is not categorized under life insurance.
The concept of insurance applies to a large group of people who may suffer from the same issue in the same region or condition. The money collected as the premium can be considered as a pool, and when someone encounters a loss, he/she is paid from this pool.
Let’s understand what is a general insurance policy and how does it work with the following example. Suppose your family member suffered a heart attack, and they require a transplant on an immediate basis. At the same time, you have to pay the fees for your daughter's first year of college. Now, you have huge expenses to meet simultaneously, and both the issues have the same priority. In this stressful time, a health insurance policy for your family can share your burden by paying for the transplant, and you can pay the fees of your daughter from your savings without any worry. In this way, general insurance in India works as your saviour.
Unlike life insurance policies, the tenure of general insurance policies is not that of a lifetime. Most general insurance products are annual contracts. Sometimes, the term lasts for the duration of a particular economic activity or a given period. However, a few products, like home insurance, have a longer term of up to 10 years.
Suppose you are driving back home after completing a stressful day at work, and suddenly, another car hits your car from behind. Your car's bumper comes out, and it gets a dent. Now, you require approximately ₹7500 to fix the bumper and ₹2000 for dent repair. A car insurance plan will play a key role in such cases. The amount you have paid to repair your car can be reimbursed under a comprehensive car insurance policy. In this way, a general insurance policy for a car fulfils your requirement for financial help in case of car damage due to an accident.
| Categories | Life Insurance | General Insurance |
|---|---|---|
| Claim Applicability | Mr. A took a life insurance policy of ₹1 crore for which he has to pay ₹20,000 annually as the premium for 50 years. After giving approximately 10 instalments, Mr. A died due to a road accident. Mr. A’s family got ₹1 crore. So, the reimbursement in a life insurance plan is made either at the time of death or maturity. | Mr. A took a Fire Insurance plan for his company. The sum insured for this plan is ₹1 crore, and the premium he has to pay is ₹10 lakh. In case of loss due to fire, the insurance provider will pay the claim amount after the deductibles (as applicable). |
| Functional Period | Rajat purchased an endowment plan, which will pay some amount upon maturity, or his family members will get money if he dies. A life insurance plan is issued for the lifetime of the policyholder or until the maturity period. | Rajat purchased a comprehensive car insurance policy for his car. He purchased this plan on 02 March 2019, which will expire on 01 March 2020, after a year. So, the general insurance plans are purchased for one year. |
| Reimbursement Amount | Priti chooses to purchase a life insurance plan of ₹50 lakh. The total period for which she has to pay the premium is ten years. After completing these 10 years, she received ₹50 lakh. In this way, a life insurance plan is an investment plan that pays upon policy maturity. | Priti got the insurance of her car for ₹ 5lakh. Her car got damaged in an accident and its bumper came off. The bumper repair charges were ₹15,000 and her insurance provider will pay off this amount after deducting the deductibles. The general insurance policy works according to the limits and conditions of the policy. |
| Insurable interest | Pankaj has taken a term insurance policy, and at the time of the contract, he has to be present. In life insurance, the policyholder who has the insurable interest has to present. | Pankaj has insured his car with a car insurance policy. However, he sold his car one year later to Ruchi. Ruchi renewed this car insurance policy as the vehicle will be in use. This time, the policy was renewed by Ruchi, not Pankaj. So, in a general insurance policy, the insurable interest of the insured has to be present while the policy is renewed. |
The list of general insurance companies in India is as follows:
| Public Sector | Private Sector |
|---|---|
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| Specialized Insurers* | |
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Standalone Health Insurers* |
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Disclaimer: Rupisafe does not endorse, rate, or recommend any particular insurer or insurance product offered by an insurer.
| Gross Direct Premium Income within India for General, Health and Specialized Insurers (₹ Crore) | ||
|---|---|---|
| Insurer | 2021-22 | 2022-23 |
| Public Sector Insurers | 75,032.84 (4.44%) |
82,891.26 (10.47%) |
| Private Sector Insurers | 1,09,753.37 (11.99%) |
1,31,941.83 (20.22%) |
| Standalone Health Insurers | 20,867.18 (32.45%) |
26,243.85 (25.77%) |
| Specialized Insurers | 15,046.83 (14.73%) |
15,817.32 (5.12%) |
| Total |
2,20,700.21 (11.06%) |
2,56,894.27 (16.4%) |
Note: Figures in percentage indicate growth over the previous year
Motor insurance is a type of general insurance policy that covers all damages and liabilities resulting from a vehicle against various on-road and off-road emergencies. A comprehensive policy even secures against damages caused by natural and manmade calamities, including acts of terrorism.
Motor insurance offers protection to the vehicle owner against:
Motor insurance is mandatory in India as per the Motor Vehicles Act, 1988, and needs to be renewed every year. Driving a motor vehicle without insurance in a public place is a punishable offense.
Third-party insurance is a statutory requirement in our country. Thus, the owner of the vehicle is legally liable for any injury or damage caused to a third party life or property by or arising out of the use of the vehicle in a public place.
A comprehensive motor insurance policy would include a personal accident and liability only policy (third party insurance) in addition to own damage cover (damage to the owner's vehicle) in one policy.
Common motor insurance categories include:
Some attractive benefits of motor insurance include roadside assistance, cashless servicing at the nationwide network of workshops and garages, personal accident cover, and towing assistance.
Healthcare costs are increasing every year. Sedentary lifestyles and stress at work negatively affect health and can result in a critical illness or medical emergency. Such a scenario is sure to adversely affect people financially, due to the massive medical expenditure. A health insurance policy is the only way to mitigate these financial risks, apart from leading a healthy lifestyle. Health insurance guarantees peace of mind in times of crisis and helps secure the health of policyholders and their families.
Health insurance covers the medical and surgical expenses of the insured incurred during hospitalization from an illness or an injury. Additional riders enhance the benefits and scope of the cover.
Health insurance often includes cashless treatments pre and post-hospitalization expenses, ambulance charges, daily cash allowance, etc.
Common types of health insurance policies include:
International travel, whether on vacation or business, can turn into a nightmare if someone experiences contingencies like loss of baggage, loss of passport, delay in the flight, medical emergency, etc. Such eventualities will surely take the fun out of travelling.
Travel insurance, also referred to as visitor insurance, covers the insured against unseen medical and non-medical emergencies during overseas travel, ensuring a worry-free travel experience. It protects the insured against misfortunes while travelling. Backed up by travel insurance, the whole experience is like no other.
Different types of travel insurance policies include:
In addition to the above, some insurance companies offer special plans like a corporate travel policy or comprehensive policy for travel to special destinations like Asia and/or Europe.
Home is often the most treasured possession of an individual and also the largest financial investment people make in life. Safeguarding the physical structure and contents of the home seems like a logical thing to do.
Home insurance protects the house and/or its contents, depending on the scope of the insurance policy opted for. It secures the home against natural calamities and manmade disasters and threats. Home insurance protects against risks and damages from fire, burglary, theft, flood, earthquakes, etc., covering the physical asset (building structure) and valuables (contents) in it.
Home insurance ensures that people's hard-earned savings are utilized to meet important needs instead of using them for rebuilding the house if some harm was to come to it.
Businesses involve the import and export of goods within national borders, and across international borders. The movement of goods is fraught with the risk of mishaps, which can result in damage and/or destruction of shipments. This leads to substantial financial losses for both the importers as well as the exporters.
Marine cargo insurance covers goods, freight, cargo, and other interests against loss or damage during transit by rail, road, sea, and/or air. Shipments are protected from the time the goods leave the seller's warehouse until they reach the buyer's warehouse. Marine cargo insurance offers complete financial protection during transit of goods and compensates in the event of any loss suffered.
The party responsible for ensuring the goods are determined by the sales contract. Marine cargo insurance policy can be taken by buyers, sellers, import/export merchants, buying agents, contractors, banks, etc. This type of general insurance policy usually covers the cargo, but can also be extended to cover the interest of a third-party post transfer of ownership as determined by terms of sale.
Common types of marine insurance policies:
The hull of a ship or boat can be insured under marine hull insurance.
Insurance solutions to meet the needs of agriculture and rural businesses form part of rural insurance. IRDAI has stipulated annual targets for insurers to provide insurance to the rural and social sectors.
As per these regulations, insurers are required to meet year-wise targets:
As the name of this general insurance policy suggests, a mobile insurance plan safeguards a mobile phone from accidental damage. In the mobile insurance policy, the insurance company compensates for the repair of the mobile's screen damaged in an accident. Mobile buyers have the freedom to purchase a mobile insurance plan for both new and old mobiles. Mobile insurance is one of those types of general insurance in India that is very affordable as compared to expensive phones.
Not just two-wheelers and cars, people these days are passionate about expensive bicycles as well. Call it a lifestyle change or fashion, but bicycles are another most wanted product today. Many insurance providers offer coverage for personal accidents, accidental damage, theft, and even hospitalization with a bicycle insurance policy.
Commercial insurance encompasses solutions for all sectors of the industry arising out of business operations. Insurance solutions for automotive, aviation, construction, chemicals, foods and beverages, manufacturing, oil and gas, pharmaceuticals, power, technology, telecom, textiles, transport, and logistics sectors. It covers small and medium scale enterprises, large corporations as well as multinational companies.
Common types of commercial insurance:
Agriculture Insurance Company of India Limited was formed on December 20, 2002, on an order of the Government of India, and started its operations from April 1, 2003. The company was formed to cater to the needs of the agriculture sector and allied activities, and cater especially to the farming community.
Agriculture Insurance Co. has 6 promoters, including General Insurance Corporation (35%), National Bank for Agriculture and Rural Development (30%), National Insurance Company Limited (8.75%), The New India Assurance Company Limited (8.75%), The Oriental Insurance Company Limited (8.75%) and United India Insurance Company Limited (8.75%).
The products include:
Export Credit Guarantee Corporation of India was started in 1957 and is owned by the Union Ministry of Commerce and Industry of India. It was formed to provide credit risk insurance and related services to promote exports from India. It also offers overseas investment insurance to Indian companies who want to invest abroad in joint ventures.
The products include:
National Insurance Company is one of the oldest general insurance companies in India, having been formed in erstwhile Calcutta on December 5, 1906. It was later nationalized to form National Insurance Company Limited. The company has been a pioneer and has many firsts to its credit, including the introduction of insurance product customization for corporate and rural markets. It is also the first Indian insurance company to have entered into strategic alliances with automobile manufacturers, such as Maruti Suzuki and Hero Motors. NIC has also spearheaded bancassurance in the country in partnership with some of the country's largest banks. The company has been given high credit ratings, which demonstrate its strong investment performance in the list of insurance companies.
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New India Assurance Company was formed as a part of the Tata business empire on July 23, 1919. It was later nationalized in 1973 and is currently one of the largest general insurance players in the country. The New India Assurance Co. Ltd. has global re-insurance facilities and a significant international presence across 25 countries.
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The Oriental Insurance Company specializes in formulating covers for large industrial projects. This insurance company in India is a pioneer in laying down systems for the smooth conduct of business. All shares of the Oriental Insurance Co. Ltd. are held by the Indian central government.
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United India Insurance Company is one of India's leading general insurance companies. It was formed through a merger of more than 20 companies during the nationalization of the insurance sector in 1972. Headquartered in Chennai, its customer base includes everyone from large corporations to the rural agricultural population.
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Every insurance company presents its prominent facet while selling a plan, but the claim settlement decides how good the company is. Customers should ideally look for the following three factors while making a purchase:
Of all the forms of general insurance, only Health Insurance comes with tax benefits. As per Section 80D of the Income Tax Act 1961, the premium paid for a health insurance plan qualifies as a tax deduction from the total income. The upper limit for this tax exemption is ₹25,000 and is extendible up to ₹50,000 for senior citizens. If a person pays the premium for themselves and their parents, a maximum amount of ₹75,000 will qualify for the tax deduction from the total income.
Disclaimer: *Tax benefit is subject to changes in tax laws **Rupisafe does not endorse, rate, or recommend any particular insurer or insurance product offered by an insurer.