Last Updated on Apr 26, 2023 by Anjali Chourasiya
Have you ever heard of Alien Abduction insurance? It can be one of the crazy insurance policies out there. The chances of that happening is one in a trillion. But thankfully, there are several insurances available in India that save us from unfortunate incidents that are more likely to bother us. In this article, let’s look at general insurance, its types, the difference between general and life insurance, claim settlement, taxation, and general insurance companies in India.
Table of Contents
What is general insurance?
General insurance is a non-life insurance policy that includes a wide range of general insurance policies such as automobile insurance, Mediclaim, homeowner’s insurance, travel, and many more. These policies enable you to shield your homes, cars, health, and other valuable possessions from the financial effects of any major or minor risks.
There are various general policies available in India. You can select the appropriate type with the threats you wish to cover.
Why do I need a general insurance company?
Imagine you are buying a new car, and the salesperson is prompting you to buy the insurance, but you decide otherwise. Right after a week, you had a stressful day at work, but you are happy driving your new car. Unfortunately, another car bumps into you from behind, and you get a huge dent on your bumper, and more so, it comes out as well, which can cost over Rs. 9,000. Comprehensive car insurance in such a case can help you get a reimbursement for the repairs. Now, you are in the middle of the road, regretting not buying the right insurance at the right time.
You can avoid situations like this with the help of general insurance that provides financial help in case of uncertainty or misfortune.
Difference between life insurance and general insurance
Here’s the difference between life insurance and general insurance in brief:
| Points of difference | Life insurance | General insurance |
| Meaning | The insurance contract, in which the life risk of an individual is covered. | Non-life insurance covers various other types of insurance, such as motor, travel, etc. |
| What is it? | It is a form of contract. | It is a contract of indemnity where one party promises to save the other from loss caused to them by the promisor or the conduct of any other person. |
| Term of contract | Long term | Short term |
| Premium payment mode | Paid over the years. | Lump-sum amount. |
| Claim payment | The reimbursement is made either at the time of death or maturity. | Loss is reimbursed, or liability incurred will be repaid on the occurrence of an uncertain event. |
What Are the Types of General Insurance Policies?
Motor insurance
A motor insurance plan covers all kinds of damages and losses incurred by a vehicle in on-road and off-road emergencies. There are two types of motor insurance policies: third-party and comprehensive. While third-party insurance covers damages caused to others by the insured vehicle, comprehensive insurance provides coverage against both natural and man-made calamities, including the act of terrorism.
Two-wheeler, car, and commercial vehicle insurances are available in India. Some attractive benefits of motor insurance comprise roadside assistance, cashless garages, personal accident cover, and towing assistance.
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 offence.
Health insurance
A sedentary lifestyle and stress at work negatively affect health and can even cause a critical illness or medical emergency. Moreover, healthcare costs are increasing every year. In such a scenario, a health insurance policy is the only way to avoid financial risks and lead a healthy lifestyle. It helps in securing your and your loved ones’ health and provides peace of mind.
Some merits of health insurance often include pre and post-hospitalisation expenses, a cashless facility at impanelled hospitals, ambulance charges, daily cash allowance, etc. Common types of health insurance policies are individual policies, family floater policies, surgery cover, and comprehensive health insurance.
Travel insurance
Imagine you are travelling with your family to your dream country, and your journey turns into a nightmare because of many reasons, including a delayed flight, loss of luggage, and medical emergency. It took all your fun away from travelling and more money from your pocket. So, what do you do in such a situation?
Well, travel insurance covers unseen medical and non-medical emergencies during overseas travel. It ensures a worry-free travel experience by protecting you and your family against misfortunes while travelling. Types of travel insurance available are individual, family, student, senior citizen, corporate, and a comprehensive policy for special destinations like Asia and/or Europe.
Home insurance
A house is one of the largest financial investments anyone makes in their life. Safeguarding the home you live in is also one of the top priorities. With a home insurance policy, you can protect your house and/or its contents, depending on the merits of the home insurance policy you have taken.
Home insurance protects your house against risks and damages from fire, burglary, flood, earthquakes, theft, etc. In case any misfortune happens, you can be assured your home insurance policy will help you rebuild your house without putting a dent in your savings.
Marine insurance
Businesses involved in the import and/or export of goods nationally or internationally invest in marine insurance. It covers goods, cargo, freight, and other interests against loss or damage during transit by rail, road, sea, and/or air. But is the entire trip covered? Yes, shipments are protected from the time the goods leave the seller until they reach the buyer. In case of damages, the marine insurer compensates for the loss suffered.
We all remember Titanic, don’t we? To avoid such incidents, you can insure the hull of the ship or boat under marine insurance.
Rural insurance
The Insurance Regulatory and Development Authority of India (IRDA) has stipulated annual targets for insurers to provide insurance to rural and social sectors. Hence, rural insurance helps meet the needs of agriculture and rural businesses.
Bicycle insurance
Not just expensive cars, nowadays people are passionate about expensive bicycles. Ensuring its safety has become a necessity too. Bicycle insurance policies offer cover for accidental damages, personal accidents, theft, and even hospitalisation.
Commercial insurance
Insurance solutions that arise out of business operations are covered by commercial insurance. It covers small and medium-scale enterprises, large corporations, and multinational companies. Some common types of commercial insurance are energy insurance, engineering insurance, employee benefits insurance, liability insurance, international insurance, and more.
Other types of general insurance
- Mobile insurance
- Personal accident insurance
- Corporate insurance
- Fire insurance
- Crop insurance
List of General Insurance Companies in India
According to the Insurance Regulatory and Development Authority of India (IRDA), there are 27 general insurance companies in India, as listed below.
Public/Government general insurance company in India
- National Insurance Company Limited
- The New India Assurance Company Limited
- The Oriental Insurance Company Limited
- United India Insurance Company Limited
- Kshema General Insurance Limited
- HDFC ERGO General Insurance Co.Ltd.
- Acko General Insurance Limited
- ECGC Limited
- Agriculture Insurance Company of India Ltd.
Private general insurance companies in India
- Bajaj Allianz General Insurance Co.Ltd.
- Bharti Axa General Insurance Co. Ltd (Merged with ICICI Lombard General Insurance Co. Ltd)
- Cholamandalam MS General Insurance Co.Ltd
- Future Generali India Insurance Co. Ltd.
- Go Digit General Insurance Co. Ltd.
- IFFCO Tokio General Insurance Co. Ltd.
- Kotak Mahindra General Insurance Co. Ltd.
- Liberty General Insurance Co. Ltd.
- Magma HDI General Insurance Co. Ltd.
- Navi General Insurance
- Raheja QBE General Insurance Co. Ltd.
- Reliance General Insurance Co. Ltd.
- Royal Sundaram General Insurance Co.Ltd.
- SBI General Insurance Co. Ltd.
- Shriram General Insurance Co. Ltd.
- TATA AIG General Insurance Co. Ltd.
- Universal Sompo General Insurance Co. Ltd.
- Zuno General Insurance Ltd. (formerly known as Edelweiss General Insurance Co. Ltd.)
Claim settlement for general insurance policies
Every insurer highlights its attractive features and benefits when selling insurance policies and can claim their policy to be the best in the market. However, the true measure of an insurance company’s effectiveness lies in its ability to process claims, which can be determined by examining its claim ratios. As an insurance policy buyer, it is crucial to consider three critical factors when making a purchase:
- Claim Settlement Ratio: This is the number of insurance claims settled by the insurer compared to the total number of claims filed during a financial year.
- Incurred Claim Ratio: This represents the total amount spent by the insurer on settling claims compared to the total revenue earned from premiums in a financial year.
- Claim Settlement Turnaround Time: This refers to the duration between the filing and settlement of a claim or the amount of time it takes for the insurer to process and settle a claim.
Tax benefits with general insurance policies
Of all the types of general insurance available in India, only health insurance comes with tax benefits. Under Section 80D of the Income Tax Act, 1961, you receive tax benefits on health insurance premiums paid in any manner other than cash.
For your parents: You can avail of a tax credit of up to Rs. 25,000 for the health insurance premiums paid towards covering your parents. However, if the insured person is 60 yrs or older, the limit increases to Rs. 50,000.
For yourself, children, and spouse: You can enjoy a tax credit of up to Rs. 25,000 on health insurance premiums paid for yourself, your spouse, or your dependent children. In case the insured individual is 60 yrs or older, the limit for tax credit increases to Rs. 50,000.
To wrap up
In conclusion, general insurance is an essential financial product that protects individuals and businesses against unforeseen risks and uncertainties. By understanding the types of general insurance policies available in India, their differences from life insurance, and the factors that affect their claim ratios and taxation, you can make informed decisions while choosing the right policy for their needs. Additionally, by researching and comparing the offerings of different general insurance companies in India, you can ensure that they get the best coverage and benefits for their premium payments.
FAQs
Why should I avail a general insurance?
Availing a general insurance policy can provide insurance coverage for both you and your belongings, saving you a significant amount of money in case of accidents or mishaps.
What is the difference between general insurance and life insurance?
While general insurance covers the insured person and their specific belongings, life insurance provides coverage for the insured person’s life. Examples of general insurance are motor insurance, travel insurance, etc.
How many general insurance companies are there in India?
According to the Insurance Regulatory and Development Authority of India (IRDA), there are 27 general insurance companies in India. They are divided into public and private insurance companies.
Which is the first general insurance company in India?
General Insurance in India has its roots in the establishment of Triton Insurance Company Ltd in the year 1850 in Calcutta by the British. But, the first company to transact all classes of the general insurance business is The Indian Mercantile Insurance Ltd. It was set up in 1907.
Which is the largest general insurance company in India?
According to the market cap, The New India Assurance Co. Ltd. is India’s largest general insurance company.
As an insatiable reader and learner, I’ve spent the last two years exploring the world of finance. With my creative mind and curious spirit, I love making complex finance topics easy and fun for everyone to understand. Join me on my journey as we navigate the world of finance together!
