Subject:-

Principle and Practice of General Insurance

Class: - MBA-IV

Unit-III

Ashutosh Kumar Jha

Assistant Professor
Medi-Caps University, Indore
 Fire Insurance
What is Fire Insurance?

Fire insurance is a legal contract between an insurance company and the

policyholder which guarantees that any loss or damages caused to the
policyholder’s property in a fire will be paid by the insurance company. Fire
insurance provides coverage against incidents of accidental fire, lightning,
explosion, etc

Why is Fire Insurance Important?

Fire accidents are unexpected and cause enormous destruction not only in terms
of finances but it becomes tougher to deal with the aftermath. Owning a
business, one is always prone to risks and a fire eruption can instantly bring a
flourishing business to a stalemate.

Let us understand why fire insurance is a wise choice. Having a fire insurance
policy comes with a broad range of scope, which includes:

A fire insurance policy provides comprehensive protection against any damage

caused due to fire explosion, caused due to either movable or immovable
property.

A fire insurance policy encompasses damages to the properties, for instance,

damage caused to an office building, furnishings, machinery, stock, etc. due to a
fire-outbreak.

Besides, fire-related perils, a fire insurance policy also encompasses damages

caused due to any natural calamity, explosion, the bursting of the water tank, etc.
Types of Fire Insurance in India

On the premise of the necessities, the following types of fire insurance policy can
be availed, which are:

Specific Policy: Under this policy, for a certain property, a specified sum insured is
determined and in case of any loss, the compensation will be provided for the loss
provided it is less than the determined amount.

Comprehensive Policy: This policy provides extensive coverage not only against
fire-related perils but also provides coverage against any other perils, such as
robbery, burglary, civil rampage, etc.

Valued Policy: At the initiation of the policy, the value of a particular property is
determined. On the premise of the value of the property, the insurance of the
policy is decided wherein the insurer will pay the value in the case of destruction
of property by fire.

Floating Policy: This type of policy is best suited for owners who run a business of
import and export. This policy will provide you with coverage securing your goods
lying at various places. It is to be noted that the goods need to belong to the same
individual under one sum assured and one premium covering all the perils related
to the goods.

Consequential Loss Policy: A fire-outbreak in a workplace like in a factory may

disrupt the workforce that is production might go down but the fixed expenses
continue at the same price. This policy essentially provides coverage for
consequential loss or loss of profits. On the premise of loss of sales, the loss of
gains is calculated.

Replacement Policy: In this policy, the insurance provider assures compensation

for the loss of the premise of the property’s market value. After contemplating
the depreciating value o the property, the amount that is to be compensated is
calculated. The compensation provided will be at the replacement price, which
implies that the new asset will be of the price that has been lost. It is to be noted
that there will not be any additional expense as the compensation provided will
be on the new asset’s market price.

Inclusions under Fire Insurance in India

Covering a wide range of perils, it is often termed as Standard Fire and Special
Perils Policy. In the below grid, let us have a look at the inclusion the policy offers:

Fire Insurance Perils Inclusions

Fire
The policy provides coverage for any
damage
caused due to the fire. Besides, any
damage
caused due to natural heating, own
fermentation
or unconstrained burning is not
included.

Lighting If any damage/loss occurs because of

lighting, for instance, cracks in the
roof/building area, etc. it will be
covered.
Explosion Damage caused by a fire explosion is
covered under this policy.
Aircraft Damage If any damage happens which leads to
fire due to an aircraft, for instance,
articles dropped by an aircraft, airborne
devices etc. will be covered under the
policy.
Natural Calamity Any damage to the insured property
due to any natural calamity such as
storm, tycoon, etc. is covered under the
policy.
Exclusions Under Fire Insurance Policy in India

No cover for damages caused due to nuclear perils, nuclear waste or radioactivity.

No cover for any damage/loss to any of the electrical machines, short circuit,
apparatus, leakage of electricity, etc.

No cover for loss/damage theft or expense incurred directly or indirectly caused

by any kind of terrorist activity are not covered by the policy.

No cover for damage due to war, invasion, civil war, commotion, mutiny warlike
situations, etc.

No cover for the damage/loss to the stock due to change in temperature; loss or
damage directly or indirectly by some of the natural disasters like earthquake,
volcano etc.

No coverage is provided under the loss of earning, loss of delay or market loss,
consequential loss.
 Marine Insurance

What is Marine Insurance?

Marine Insurance is a type of insurance policy that provides coverage against any
damage/loss caused to cargo vessels, ships, terminals, etc. in which the goods are
transported from one point of origin to another. Marine insurance coverage
includes loss or damage caused to the shipment/cargo/ ship while is grounded,
and also from untoward perils like- sinking, collision, burning, weather conditions,
navigation errors, theft, jettison, improper stowage by the carrier, hook damage,
strikes, war, and natural perils.

Cargo Insurance

A marine cargo insurance policy is necessary for all the owners of the ship who
use it for a commercial or transportation purpose. However, the insurance
coverage is not only limited to sea there are plans that offer coverage during rail,
land, sea, and air transport.

Any untoward perils can cause huge financial loss to the shipment. Insuring the
goods against any unforeseen incident such as an accident, collision, overturning,
etc. during transit also means a secured business. There is another important sub-
category i.e. Marine Cargo insurance.

Comprehensive Coverage: A marine cargo insurance policy offers comprehensive

coverage against all the potential marine-related perils that the goods are
exposed to while they are in transit.

Easy Customization: The plans can be easily customized and be adjusted to meet
certain needs of the customers
Flexibility: The plans are flexible enough and have a variety of options to cater to
the requirements of the insured, considering their budget.

Types of Marine Insurance Policies

Marine Cargo Insurance

Marine Cargo insurance is a type of insurance policy that covers the loss or
damages caused to marine cargo during the transit. The protection is offered to
the cargo owner along with the cover to the cargo for any loss or damage caused
due to delay in the voyage, ship accident or unloading.

Marine insurance also covers third-party liabilities arising from any loss or damage
caused to the ship, port, or other transport forms from the insured cargo. This
type of insurance is mainly beneficial for tankers and other heavy cargo
shipments. Simply put marine insurance policy safeguards the ship

Liability Insurance

This type of insurance protects the ship in case of a crash, collision or any attack
that can lead to a huge loss or damage. It compensates the policyholder for any
such liabilities that are beyond his control.

Hull Insurance

This marine insurance policy provides coverage to vessel including the furniture
and articles of the ship against any unanticipated mishaps. It is imperative for the
ship owners to buy this policy and not to overlook it.
What is covered in Marine Cargo Insurance?

The policy provides coverage from the risks arising during transit via sea and other
modes of transport.
The insurer compensates for the following:

Marine insurance coverage is provided from dire situations like fire or explosion,
sinking, stranding during a cargo journey Compensation is provided for expenses
incurred due to collision, overturning or derailment of land conveyance

Compensation is provided for expenses under a circumstance wherein the cargo

is discharged from a port of distress/disturbance.

Coverage for general average sacrifice salvages charges

Protection against any natural calamities such as an earthquake or lightning

It covers expenses such as survey fees, forwarding expenses, costs of

reconditioning and charges of sue

It also covers situations like jettison and washing overboard

It also covers the total loss of the package whether overboard or dropped amidst
loading or unloading
What is Not Covered in Marine Cargo Insurance?

Compensation is not provided for any intentional loss/damage

When the packaging quality of the cargo is not appropriate

No cover shall be provided if the damage occurs due to bankruptcy, liquidation,

failure/collapse in the finances

Wear and Tear of the goods in transit

No cover shall be provided if the loss occurs due to delay in the cargo

Not all the insurers cover extreme unpredictable situations like war, strikes, riots
and civil commotion Any loss or damage resulting due to insolvency
 Health Insurance

A health insurance policy is a contract between the insurer and policyholder in

which insurance company provides financial coverage for medical expenses
incurred by the insured. A health policy provides benefit of reimbursement of
medical expenses or cashless treatment mentioned in the health policy.

Types of Health Insurance Plans

Individual Health Insurance Plans

Individual health insurance plans offer insurance protection with benefits such as
cashless hospitalization, reimbursement, compensation for expenses incurred on
pre and post hospitalization expenses, coverage for domiciliary treatment and
many more.

Family Health Insurance Plans

Family health insurance offers insurance coverage to entire family against a single
premium. Under this health plan, a defined sum insured is divided among the
policy members equally, which can be availed either by one or all members of a
family for one or more claims during the tenure of the policy. With a family health
plan, almost all the family members can be added under a single health insurance
premium.

Senior Citizen Health Insurance Plans

Senior Citizen health insurance plans offer insurance coverage to the age group
between 60 and above. The health insurance plan covers hospitalization expenses
including in-patient expenses, OPD expenses, Daycare procedures, pre, and post-
hospitalization expenses along with tax deduction benefit u/s 80 D.
Critical Illness Insurance Plans

Critical illness health insurance plans offer a lump sum amount in case the insured
is diagnosed with a critical illness such as kidney failure, paralysis, cancer, heart
attack, etc. Usually brought as a standalone policy or as a rider, the sum insured is
pre-defined, where the insured has to survive a particular survival period after
being diagnosed to avail the policy benefits.

Personal Accident Insurance Cover

Accident Insurance is a rider cover that offers Insurance coverage case of an

accident leading to disability or death. The policy coverage includes
hospitalization and bears the medical expenses in the event of accident. A fixed
monetary benefit is also offer, in case of unfortunate loss of income.

Key Benefit of Health Insurance

Cashless Medical Treatment: Every medical insurance company has tie-ups with
various nursing homes and hospitals across the country called 'empanelled
hospitals'. If you are admitted to one of these, you don’t need to pay anything.
You only need to mention your policy number and everything else will be taken
care of by the hospital and your insurer.

These types of health insurance plans are preferred because there is no stress of
claim reimbursement and documentation. However, if your expenses go beyond
the sub-limits specified by the insurance cover or marked as not covered by the
provider, then you will have to settle it directly with the hospital. Another
important thing to remember is that cashless mediclaim is not available if one
gets hospitalized which is not a part of the hospital network of the insurance
company.
Ambulance Fee : Once hospitalized the person is free from the burden of
transportation fees as it is borne by the insurer.

No Claim Bonus: NCB (or No Claim Bonus) is a bonus provided to the insured if no
claim has been filed for any treatment in the previous policy year. The reward can
be offered either as an increment in the sum assured or as a discount on the
premium cost. You can avail this advantage on policy renewal.

Miscellaneous Insurance

Travel Insurance

International travel, whether on vacation or business, can turn into a nightmare if

one experiences contingencies like loss of baggage, loss of passport, delay in the
flight, medical emergency, etc. Such eventualities will surely take the fun away
from traveling.

Travel insurance also referred to as visitor insurance, covers one against unseen
medical and non-medical emergencies during overseas travel, ensuring a worry-
free travel experience. It protects the insured against misfortunes while traveling.
Backed up by travel insurance, the whole experience is like no other.

Different types of travel insurance policies include:

Individual Travel Policy

Family Travel Policy
Student Travel Insurance
Senior Citizens Travel Policy
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 Insurance

Home is often the most treasured possession of an individual and also the largest
financial investments one makes.

Home insurance protects the house and/or the contents in it, depending on the
scope of insurance policy opted for. It secures the home against natural calamities
and man-made 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 one'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.

Rural Insurance

Insurance solutions to meet the needs of agriculture and rural businesses form
part of rural insurance.
IRDA 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:

In percentage terms of policies underwritten and percentage of total gross

premium income by general insurers under rural obligation In terms of the
number of lives under social obligation
Mobile Insurance

As the name of this general insurance policy says, a mobile insurance plan
safeguards your phone from accidental damages. In the mobile insurance policy,
the insurance company compensates for the repair of your mobile's screen
damaged in an accident. The 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 are very affordable as compared to
your expensive phones.

Bicycle Insurance

It is not just the two-wheelers and cars; people are these days as well as
passionate about expensive bicycles. You can either call it a lifestyle change or
fashion, the bicycle is another most wanted product of current time. Many
insurance providers offer cover for personal accidents, accidental damage, theft,
and even hospitalization with a bicycle insurance policy.

==========================Thank You=============================