What Is General Insurance: Benefits, Types, List Of Companies And How To Claim

Generally, there are two broad categories of insurance – life insurance and non-life insurance. General Insurance is a non-life insurance policy that covers expenses that do not include life. For example, health, automobile, natural calamity, fire, etc. In case of an unfortunate event, having a general insurance cover can be of immense help. 

Take a look at the features and benefits of general insurance, its types and list of companies in India, documents required to purchase general insurance, tax benefits and the process of coverage claim. Keep reading!

What is General Insurance?

General insurance is a category of insurance that protects assets from any unexpected loss. It is a common term that covers all kinds of non-life insurance. 

For example, you have a house, and you insure it against fire by taking fire insurance. Here, the fire insurance covers any loss which might occur in case the house gets a fire.

There are different kinds of general insurance such as health insurance, vehicle insurance, etc.  

Now, what is a premium? Premium is the price paid to avail of any insurance. It is the cost price of the insurance policy. It can be paid monthly or in a lump sum while buying the insurance policy. The insurance premium is calculated based on many factors. The most important factors in case of calculating the general insurance premium are:

• The condition of the asset which is to be insured.
• Cost of the asset.
• Risks involved.

How does General Insurance Work?

The main concept behind general insurance is to help people protect themselves from the financial effect of damage and loss of property and other valuables. 

When someone buys an insurance policy, he/she is required to pay a monthly or annual premium. 

If a person faces damage or loss of property, the terms of the policy are used to help a person up to the decided limit. 

The insurer might replace the item. If terms dictate, policy-holders might also receive a cash settlement. 

Benefits and Features of General Insurance in India

The features and benefits of general insurance policies in India are enumerated below:

• In many cases, opting for general insurance policies are compulsory by law. For example, Motor Vehicles Act, 1988, has made motor insurance plans compulsory. One fulfils legal obligations after buying mandated insurance policies. Moreover, this also acts as a protection from the offence of violation.

• General insurance plans provide compensation if anyone suffers a loss. Thus, they protect one’s savings in case an emergency arises and serve as an added layer of financial protection. 

• There are many general insurance plans which provide tax benefits. For example, Section 80C of ITA allows tax deductions for premiums paid for health insurance policies. It helps a person to save tax by lowering the taxable portion of the income. 

Types of General Insurance

In today’s time, almost every asset can be insured. All non-life insurance products are categorized under general insurance. Let us understand the most common insurance types. 

Health Insurance

It covers the risk of becoming sick and protects from any financial trouble in case of medical expenses. Also called medical insurance, it covers hospitalization charges among other expenses based on policy terms. Getting health insurance is prudent & necessary in uncertain times, especially during the COVID-19 pandemic. 

Most insurance providers require individuals to pay upfront but Navi allows monthly EMIs as low as Rs. 241/month. Install the Navi health app on Android or iOS now and get your policy in under 2 minutes

Vehicle Insurance

Vehicle insurance covers the risk of financial loss due to accidents & other damages to the vehicle. It helps to avoid unnecessary & unexpected expenses on vehicles. Also called motor insurance, it is mandatory in India.

There are two types of vehicle insurance available in India:

• Third-party Insurance: It basically covers harm caused to third parties by the insured vehicle. 
• Comprehensive Insurance: It covers third party liability as well as any damage done by the vehicle owner. 

Note: it is essential to read the insurance policy document to know what is covered and what is not. 

Travel Insurance

All of us love to travel, but the unexpected loss can occur anytime, anywhere. Travel insurance takes care of all issues such as:

• Delayed trips 
• Cancelled flights
• Unexpected hotel reservation cancellation. 
• Lost luggage and,
• Stolen passport. 

So, next time, get travel insurance before planning that awaited trip. 

House Insurance

Owning a house is a dream for all. Yet, having a house is a job half done. Home insurance is a necessity in today’s time. It protects your house structure & its contents. 

The protection is available not only against natural disasters but also man-made disasters such as fire, theft, etc. Moreover, a sense of security gives you mental peace & happiness. 

Home insurance policies divide the insurance coverage into two parts: house structure and its content. It is necessary to understand the difference between the two. 

A structure-only policy will insure only the structure of the house while a content-only policy will cover just the content. Therefore, a comprehensive policy covering both the structure and content must be chosen. 

A fully furnished house is an expensive asset, the cost of repairing or refurbishing a house is high. It is always advisable to choose a comprehensive house insurance plan to avoid any risk related to a house. 

Difference Between General Insurance & Life Insurance

As the name suggests, life insurance covers your life, while general insurance covers everything else. Read below to understand more about the two. 

General insurance	Life insurance
It covers all assets other than one’s life. It is also called the non-life insurance segment.	It covers the life of the policyholder.
The insurance is generally renewed every year.	The policy is for life or maturity as per the terms.
In case of no loss within the policy period, the insurance ends.	In certain life insurance policies, the sum assured is paid after maturity to the holder.
Premium is paid every time the policy is renewed.	Premium is paid till the policy period or death of the holder as per terms.

List of General Insurance Companies in India

Given below is the list of top general insurance companies in India in 2022:

• Aditya Birla Capital
• Acko
• ICICI Lombard
• Navi
• SBI General Insurance
• Reliance General Insurance
• Oriental Insurance
• Royal Sundaram
• United India
• TATA AIG Insurance

List of Documents Required for Buying a General Insurance Policy

Given below is the list of the documents required to buy general insurance policies in India:

• Identity proof
• Age proof
• Address proof
• Income proof

Along with the aforementioned documents, there are a few insurance-specific documents that are required.

For example, for health insurance, people would need the following documents along with the aforementioned ones:

• Health Insurance proposal form, filled and signed by the proposer
• Medical examination report

For buying a motor insurance policy, people would have to submit the following documents along with the general list of documents:

• Motor Insurance proposal form, duly filled and signed by the owner of the vehicle
• Invoice of the vehicle
• RC book of the vehicle

What Are the Tax Benefits of General Insurance Plans?

The tax benefits of general insurance policies are enumerated below.

For Health Insurance:

Section 80D of ITA allows tax benefits for the premium paid for health insurance. One can claim a tax deduction for self, spouse and children for up to:

• Rs. 25,000 if below the age of 60
• Rs. 30,000 if above 60 years 

One can also seek additional tax deductions for parents:

• Up to Rs. 25,000 if they are below 60 years
• Up to Rs. 30,000 if they are above 60 years

It should be noted that tax benefits can only be availed if the premium is paid by any other mode other than cash. 

For motor insurance:

If the vehicle is used for business purposes, the premium paid for the insurance can be treated as an expense.

If the car is used for personal purposes, the premium paid cannot be treated as an expense.

If the vehicle is used for both personal and business reasons, tax deductions are allowed only for the instances when the car was used for business.

How To Claim a General Insurance?

Everyone wants to receive their claim amount in a hassle-free way. Even insurance companies know the importance of a customer-centric approach which can make all the difference.

The normal claim process of a general insurance policy is given below:

• First, the policyholder needs to inform the insurer of the damage/loss suffered.

• Next, the insurer is required to guide the policy-holder on the next step.

• The policyholder has to submit all the relevant documents and proof of damage or loss. Otherwise, the assessment of the loss might get delayed.

• Finally, the surveyor provides the assessment report to the insurer and the money is disbursed. 

What Are the Different Types of Claim Ratios for General Insurance Policies?

There are two types of claim ratios that you need to be aware of when buying a general insurance policy in India. 

1. Incurred Claim Ratio (ICR)

This tells you how likely it is for an insurance company to settle your claims. ICR is the ratio between the net claims paid by an insurer against the total premiums it has collected. 

Let us take the example of an insurance company that has collected Rs. 60 crore in premium and has paid Rs. 80 crore for settling insurance claims. In that case, its Incurred Claim Ratio is 75%. 

A high ICR may mean that a company is in good financial health and has a history of settling claims. However, if a company with low profits shows high ICR, it may not be able to sustain its operations in the long run. 

2. Claim Settlement Ratio (CSR)

CRS is the percentage of claims that an insurer has settled against the claims it has received in a year. This ratio shows you the commitment and reliability of a general insurance company towards its customers. You can check the CSR of all general insurance providers on their website. 

Let us say that a company has settled 85 claims against 100 claims it has received. In this case, its CSR would be 85%. 

The higher the CSR, the higher the chance of your claims being settled by a particular insurer. It also indicates that the company has sound financials and a robust claim settlement process. However, it does not factor in the time taken to settle claims. 

Tips to Buy Insurance

Buying insurance can be tricky. One can buy it offline or online. Buying offline is tough & inconvenient, considering you need to find an agent or visit the company office.  

On the other hand,  buying online can be a pleasant experience with a paperless, easy and minimal time-consuming process. You can get your insurance within 20 mins. 

Consider these points before you buy any insurance: 

• The insurance should match your requirements. For instance, If you are travelling abroad, getting travel insurance helps you avoid travelling risks. 
• The premium must be within your paying capacity.
• The insurance policy must cover all the major risks involved.
• The claim settlement process should be quick & easy. 
• The claim settlement ratio of the insurer must be high.

Also Read: Is Your Employer-Provided Health Insurance Policy Sufficient To Safeguard Your Family?

Things to Remember while Buying a General Insurance Policy

There are a few things that you should remember while purchasing a general insurance plan:

• The insurance should match your requirements. For instance, If you are travelling abroad, getting travel insurance helps you avoid travelling risks. 
• The premium must be within your paying capacity.
• The insurance policy must cover all the major risks involved.
• The claim settlement process should be quick & easy. 
• The claim settlement ratio of the insurer must be high.

Also Read: Should you buy health insurance on EMI?

Final Word

A non-life or general insurance helps cover expenses in case of an unforeseen and unfortunate event and loss of assets. Before you purchase general insurance, you must read the documents carefully and check what the general insurance covers. Once you decide, you can easily apply for general insurance online.  

FAQs on General Insurance

Before you go… 

• Looking for instant 🚀 personal loans 24*7 anywhere, anytime? Install the Navi app on Android or iOS now!
• Or, maybe you’re looking to buy that house you’ve been eyeing 🏠 and you need a loan of up to Rs. 10 crore. Install the Navi app on Android or iOS now and get instant in-principle approval right away! Interest rates starting at 6.71% p.a.
• How about an affordable health insurance policy 👨‍⚕️ starting at a monthly premium of just Rs. 241? Install the Navi app on Android or iOS now and get your policy under 2 minutes.
• Instead, want to put your savings into action and kick-start your investment journey 💸 But don’t have time to do research. Invest now with Navi Nifty 50 Index Fund, sit back, and earn from the top 50 companies.