Unit 5 – Concept of Insurance and Risk Management

Chapter 4 – General Insurance

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  Introduction to General Insurance
 Property Insurance
 House Holder's Insurance
 Other Commercial Insurance Policies
 Motor Insurance
 Overseas Medical and Travel Insurance

Agenda
 Corporate Frequent Travelers Policy
 Fire Insurance
 Marine Insurance
 Liability Insurance
 Cash in Transit Insurance
 Personal Umbrella Policy
 Fidelity Insurance
 Health and Personal Accident Insurance

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  Health Insurance
 Mediclaim Policy
 Family Floater Medical Insurance
 Group Mediclaim Policy
 Mediclaim Policy for Senior Citizen
 Personal Accident Insurance Policy

Agenda  Critical Illness Policy

 Some Popular Terms used in Health Insurance Policies
 Insurance of Business Risk
 Business Liability Insurance
 Business All Risk Policy
 Professional Indemnity Policy
 Directors and Officers Liability Policy
 Keyman Insurance
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 Major Types of General Insurance

Type of Meaning / Exclusions / Remarks / Key

Coverage Key Features Claim Procedure
Insurance Objective Limitations Points
Protects physical 1. Intimate insurer
• Fire, lightning, • War, nuclear
assets like • Indemnity-based 2. Submit claim
explosion risks
buildings, • Can cover form & documents • Policy value
• Earthquake, storm, • Normal wear and
machinery, stock, industrial/commercia 3. Survey by loss based on
Property flood tear
etc., from l/residential assets assessor reinstatement or
Insurance • Theft, burglary, riot, • Wilful negligence
damage or loss • Optional add-ons 4. Assessment & market value
strike or fraud
due to (terrorism, approval basis.
• Accidental damage •Electrical/mechani
unforeseen earthquake, etc.) 5. Settlement of
to property cal breakdown
perils. claim
• Fire, burglary, riot,
Provides earthquake • Package policy • Damage due to 1⃣ Inform insurer
comprehensive • combining multiple war or nuclear 2⃣ Police report (for • “All-in-one” policy
cover to Electrical/mechanical sections activity theft) for homeowners.
Householder’s
homeowners for breakdown • Customizable as • Wear & tear 3⃣ Provide • Premium
Insurance
both structure • Jewelry, valuables, per need • Intentional loss bills/evidence depends on
and contents of electronics • Usually 1-year • Poor 4⃣ Survey & claim location & value.
the house. • Personal accident, renewable cover maintenance approval
liability cover
 Major Types of General Insurance

Type of Meaning / Exclusions / Remarks / Key

Coverage Key Features Claim Procedure
Insurance Objective Limitations Points
• Fire, burglary,
Protects • Covers commercial • Consequential
machinery
business risks loss (unless • Vital for
breakdown 1⃣ Report loss
Other establishments • Flexible covered) business
• Fidelity guarantee 2⃣ Submit claim details
Commercial from risks combinations • Fraud by continuity.
(employee fraud) 3⃣ Survey &
Insurance affecting (Industrial All Risk employer • Often bundled
• Business investigation
Policies property, policy) • Gradual as “Business
interruption 4⃣ Claim settlement
employees, or • Can include third- deterioration Package Policy.”
• Money insurance
operations. party liability • Intentional acts
(cash in transit)
• Third-party liability • Governed by Motor 1⃣ Inform insurer
Provides • Drunken driving
(mandatory) Vehicles Act, 1988 immediately • Third-Party
financial • Driving without
• Own damage • Add-ons: zero 2⃣ File FIR (for Insurance –
protection for valid license
Motor (optional) depreciation, NCB theft/third-party cases) Compulsory
vehicles against • War or nuclear
Insurance • Theft, fire, natural protection, roadside 3⃣ Vehicle inspection • Comprehensive
accidental perils
calamities assistance 4⃣ Submit documents & Policy –
damage and • Mechanical
• Personal accident • Compulsory for all claim form Recommended
legal liabilities. breakdown
cover vehicle owners 5⃣ Settlement or repair
 Major Types of General Insurance

Type of Meaning / Exclusions / Remarks / Key

Coverage Key Features Claim Procedure
Insurance Objective Limitations Points
• Medical expenses • Pre-existing
1⃣ Notify assistance • Mandatory for
abroad • Available for single diseases
Covers medical center Schengen visa
Overseas • Loss of passport, trip or multiple trips • Pregnancy-
and travel- 2⃣ Provide travel & travel.
Medical & baggage • Includes 24x7 related claims
related policy details • Premium
Travel • Trip global assistance • Suicide or self-
emergencies 3⃣ Submit bills, reports depends on
Insurance cancellation/delay • Optional adventure injury
while abroad. 4⃣ Reimbursement or duration, age,
• Personal accident sports cover • War or terrorism
direct settlement and destination.
• Repatriation (unless opted)
• Annual multi-trip
• Multiple policy
• Non-business 1⃣ Notify corporate
Designed for international trips • Covers all • Cost-effective
Corporate trips not covered HR/insurer
employees who • Medical employees under corporate travel
Frequent • Pre-existing 2⃣ Claim through
travel abroad emergencies master policy solution.
Travelers illnesses corporate desk
frequently for • Baggage loss, delay • Reduces admin • Ideal for MNCs
Policy • War/nuclear 3⃣ Submit bills and
business. • Personal accident, burden and exporters.
risks travel proofs
liability cover • Global 24-hour
coverage
 Major Types of General Insurance

Category Nature of Cover Policy Duration Basis of Claim

Property / Fire / Householder Asset protection 1 year Indemnity

Commercial Policies Business protection 1 year Indemnity

1 year / 3 years (new

Motor Insurance Vehicle + liability cover Indemnity (except PA)
vehicles)

Travel / Medical Personal + trip-related Per trip / annual Reimbursement basis

Corporate Frequent Travelers Multiple trips / employees 1 year Reimbursement basis

 Major Types of General Insurance
Type of Meaning / Exclusions / Remarks / Key
Coverage Key Features Claim Procedure
Insurance Objective Limitations Points
• Fire, lightning, • Based on Indemnity
Provides • War/nuclear 1⃣ Notify insurer • Two valuation
explosion Principle
protection risks immediately bases:
• Earthquake, • Common policy:
against loss or • Pollution or 2⃣ Fire brigade report Reinstatement
storm, flood, Standard Fire & Special
damage due to contamination 3⃣ Submit claim form, Value or Market
Fire Insurance cyclone Perils Policy (SFSP)
fire and allied • Theft after fire proof, estimates Value.
• Riot, strike, • Policy term – 1 year
perils to • Wilful 4⃣ Surveyor • Fire must be
malicious damage • Can cover buildings,
property, assets, negligence or assessment actual
• Impact by stock, machinery,
or goods. arson 5⃣ Settlement combustion.
vehicles/aircraft furniture
• Loss/damage to • Types: • Delay or loss
cargo or vessel 1. Hull Insurance – due to delay
Protects cargo, 1⃣ Intimate insurer
• Piracy, collision, Ship • Improper • Based on Marine
ship, and freight immediately
stranding 2. Cargo Insurance – packing Insurance Act,
against 2⃣ Submit policy,
Marine • Natural Goods • War/nuclear 1963.
loss/damage invoice, shipping
Insurance calamities (storm, 3. Freight Insurance – perils (unless • Insurable interest
during transit docs
lightning) Freight charges covered) must exist at the
over sea, air, or 3⃣ Survey & report
• General • Policies: Voyage, • Ordinary time of loss.
land. 4⃣ Settlement of claim
Average Time, Mixed, Floating, leakage or
contribution Open wear & tear
 Major Types of General Insurance

Type of Meaning / Exclusions / Remarks / Key

Coverage Key Features Claim Procedure
Insurance Objective Limitations Points
Covers legal • Protects against
• Public Liability • Intentional acts 1⃣ Notify insurer
liability to third lawsuits and
• Product • Contractual immediately • Mandatory in
parties for bodily compensation claims
Liability liabilities 2⃣ Submit legal certain sectors
Liability injury, death, or • Covers legal
• Professional • War/nuclear notice/claim copy (e.g., Public
Insurance property damage expenses
Indemnity damage 3⃣ Investigation Liability Insurance
caused by • Claims-made or
• Employer’s • Pollution (unless 4⃣ Legal defense & Act, 1991).
insured’s occurrence-based
Liability covered) claim settlement
negligence. policies
• Loss due to • Covers transit by
theft, robbery, employee or • Employee fraud
Protects money • Often taken by
hold-up during authorized (unless covered) 1⃣ Intimate insurer
(cash, cheques, banks, jewellers,
transit messenger • Loss from 2⃣ Police report
Cash-in-Transit drafts) during retailers.
• Loss in safe • Can include “Cash unattended vehicle 3⃣ Statement of loss
Insurance transit between • Premium
within premises in Safe” cover • War/nuclear risks and evidence
office, bank, or depends on max
• Damage to • Sum insured = max • Shortage due to 4⃣ Settlement
other premises. transit limit.
cash due to cash carried at one error
accident time
 Major Types of General Insurance

Type of Meaning / Exclusions / Remarks / Key

Coverage Key Features Claim Procedure
Insurance Objective Limitations Points
• Personal liability • Business-related
Provides • High-limit protection 1⃣ Claim under base • Provides peace
• Legal defense liability
additional liability (₹1 crore or more) policy first of mind for high-
Personal costs • Intentional harm
coverage over and • Fills gaps in existing 2⃣ If limit exhausted, net-worth
Umbrella • Injury to others • Professional
above standard liability policies umbrella policy applies individuals.
Policy • Damage to services
personal policies • Extends coverage 3⃣ Submit supporting • Works as excess
third-party • War or nuclear
(auto, home, etc.). globally docs liability cover.
property loss
• Theft, • Policies: Individual,
• Non-disclosure 1⃣ Notify insurer • Common in
Covers financial embezzlement, Collective, or Blanket
of previous frauds 2⃣ Provide evidence of banks, NBFCs,
loss due to forgery, fraud • Employer must
Fidelity • Loss discovered fraud retail firms.
dishonest or • Loss of money, prove employee’s
Insurance after policy expiry 3⃣ Police report • Based on
fraudulent acts by stock, or property fraud
• Negligence 4⃣ Assessment & claim “Utmost Good
employees. due to employee • Indemnity limited to
without fraud approval Faith.”
dishonesty sum insured
 Major Types of General Insurance

Category Basis of Cover Policy Duration Type of Policy Claim Basis

Fire / Marine / Cash-in- Asset / Cargo

1 year / per voyage Indemnity-based Actual loss
Transit Protection

Liability / Umbrella / Legal or financial

1 year Indemnity-based Actual loss/legal liability
Fidelity protection

Health & Personal Indemnity (Health) / Actual expense / fixed

Life/health protection 1 year / multi-year
Accident Benefit (Accident) sum
 Health & Medical Insurance Policies

Meaning / Exclusions / Remarks / Key

Type of Policy Coverage Key Features Claim Procedure
Objective Limitations Points
Provides • Hospitalization 1⃣ Inform
• Annual renewable
financial (room rent, insurer/TPA
policy • Pre-existing • Indemnity-based
protection medicines, tests, 2⃣ Cashless:
• Cashless & diseases (waiting policy (reimburses
against doctor fees) Hospital sends
Health reimbursement period 2–4 years) actual expenses).
medical • Pre & post- pre-auth
Insurance options • Cosmetic or • Regulated by
expenses hospitalization 3⃣ Reimbursement:
(General) • Add-ons: dental treatment IRDAI (Health
arising from • Ambulance Submit bills,
maternity, OPD, • Self-inflicted Insurance)
illness, charges reports
critical illness, injury, war risks Regulations, 2016.
surgery, or • Daycare 4⃣ Settlement by
AYUSH cover
hospitalization. treatments insurer
Traditional • Pre-existing
• In-patient • The most basic
hospitalization • Individual cover disease (initial 1⃣ Notify
treatment form of health
policy covering • Sum insured waiting period) TPA/insurer
• Pre & post- insurance.
Mediclaim medical chosen by proposer • Maternity & dental 2⃣ Pre-auth for
hospitalization • Based on
Policy expenses due • Cashless facility (unless opted) cashless
(30/60 days) indemnity (actual
to illness, through network • HIV/AIDS, war, or 3⃣ Submit bills for
• Surgeries, cost
disease, or hospitals alcohol-related reimbursement
diagnostics reimbursement).
accident. treatments
 Health & Medical Insurance Policies

Meaning / Exclusions / Remarks / Key

Type of Policy Coverage Key Features Claim Procedure
Objective Limitations Points
• Economical (one
• Covers
Provides premium for entire • If one member
hospitalization of • Best for young
single sum family) uses the entire sum 1⃣ Same as
any insured families.
Family Floater insured shared • Sum insured insured, others Mediclaim
member • Easier
Medical by all family shared across have zero balance 2⃣ Claim under
• Pre & post management than
Insurance members members • Age of eldest cashless/reimburs
hospitalization multiple individual
under one • Covers spouse, member decides ement
• Ambulance & policies.
policy. children, dependent premium
daycare
parents
• Hospitalization • Cost-effective • Only valid till
Offered by expenses for all • No medical check- employee is part of 1⃣ Claim through
employers/insti employees & up the organization HR/TPA
• Employer-paid or
Group tutions to dependents • Immediate • Limited sum 2⃣ Submit
contributory.
Mediclaim employees or • Maternity & pre- coverage for all insured per hospitalization
• Regulated under
Policy members as a existing diseases members member proof
IRDAI guidelines.
group health often covered • Policy renewed • May exclude 3⃣ Insurer settles
cover. • Optional top-up by annually by certain high-cost claim
employees employer treatments
 Health & Medical Insurance Policies

Meaning / Exclusions / Remarks / Key

Type of Policy Coverage Key Features Claim Procedure
Objective Limitations Points
• Entry age: 60–80
• Some schemes by
Designed for • Hospitalization years • Waiting period for
PSU insurers under
individuals • Pre & post- • Higher premium pre-existing
1⃣ Submit claim as IRDAI Senior Citizen
Mediclaim aged 60 years hospitalization • Co-payment diseases
per TPA procedure Guidelines.
Policy for Senior and above, • Domiciliary clause (insured • No coverage for
2⃣ Senior citizen • Income tax
Citizens covering age- treatment shares % of claim) terminal illness
card/ID required deduction under
related • Health check-up • Pre-existing • Restricted room
Sec. 80D (₹50,000
illnesses. benefits disease covered rent limits
limit).
after 1–2 years
• Fixed benefit
• Accidental death policy (not • Death due to 1⃣ Notify insurer
• Payout is
Covers death • Permanent total indemnity) illness, suicide 2⃣ Submit
Personal predefined sum
or disability disability • Worldwide • War/nuclear perils medical/police
Accident assured, not actual
caused by an • Partial disability coverage • Self-inflicted injury reports
Insurance expenses.
accident (not • Temporary total • Add-ons: • Participation in 3⃣ Assessment by
Policy • Can be standalone
illness). disability (weekly hospitalization, risky sports (unless insurer
or rider to life policy.
income benefit) ambulance, opted) 4⃣ Fixed sum paid
education benefit
 Health & Medical Insurance Policies

Meaning / Exclusions / Remarks / Key

Type of Policy Coverage Key Features Claim Procedure
Objective Limitations Points
• Benefit-based
(one-time
• Illness not listed in
Pays lump- payout)
policy 1⃣ Submit diagnosis
sum benefit on • No link to
• Pre-existing proof & medical • Useful for income
diagnosis of actual
• Cancer, kidney failure, disease records replacement.
Critical Illness specified treatment cost
stroke, major organ • Death within 2⃣ Insurer verifies • Can be standalone
Policy critical • Waiting
transplant, paralysis, etc. survival period illness or add-on to
illnesses (e.g., period: 90 days
• HIV/AIDS or 3⃣ Lump-sum health/life policy.
cancer, heart • Survival
congenital payment made
attack, stroke). period: usually
conditions
30 days post-
diagnosis
 Health & Medical Insurance Policies

Policy Type Nature Type of Cover Basis of Payment Target Group

Health / Mediclaim Indemnity Medical expenses Actual reimbursement Individuals

Shared family sum

Family Floater Indemnity Actual reimbursement Families
insured

Group Mediclaim Indemnity Employee group cover Actual reimbursement Employees / Groups

Senior Citizen
Indemnity Elderly health cover Actual reimbursement 60+ years
Mediclaim

Personal Accident Benefit Accident death/disability Lump sum Individuals / Employees

Critical Illness Benefit Specific diseases Lump sum Individuals / HNIs

 Business Risk & Liability Insurance
Type of Meaning / Exclusions / Remarks / Key
Coverage Key Features Claim Procedure
Insurance Objective Limitations Points

• Combines multiple • Intentional acts • Umbrella concept

Provides protection • Property damage
insurance types • Gradual 1⃣ Identify loss — covers all major
to businesses • Fire, theft, natural
• Customizable deterioration 2⃣ Notify insurer business
Insurance against financial disasters
package (Fire, • War/nuclear 3⃣ Submit documents & operational risks.
of Business loss from • Liability towards third
Liability, Fidelity, perils assessment reports • Acts as the
Risk operational, parties
Marine, etc.) • 4⃣ Surveyor evaluation foundation for other
financial, or legal • Employee dishonesty,
• Helps ensure Speculative/mark 5⃣ Claim settlement specialized
risks. business interruption
business continuity et risks business policies.

1⃣ Notify insurer
• Public Liability • Covers • Intentional
Protects the immediately
(injury/damage to compensation, legal damage • Vital for
business from legal 2⃣ Submit notice of
outsiders) costs & settlements • Contractual businesses dealing
liabilities to third claim or legal
Business • Product Liability • Claims-made or liability with customers or
parties for bodily summons
Liability (defective products) occurrence-based • Pollution the public.
injury, death, or 3⃣ Investigation and
Insurance • Employer’s Liability coverage (unless covered) • Helps protect from
property damage defense arranged by
(workplace injury) • Mandatory in some • Professional major lawsuit
due to business insurer
• Commercial General industries errors (covered losses.
operations. 4⃣ Settlement or
Liability (CGL) (hazardous units) separately)
judgment payment
 Business Risk & Liability Insurance
Type of Meaning / Exclusions / Remarks / Key
Coverage Key Features Claim Procedure
Insurance Objective Limitations Points
Provides • “All Risks” except • Wear & tear,
• All accidental 1⃣ Inform insurer
comprehensive those excluded rust, mechanical
loss/damage to immediately • More
coverage for all • Covers equipment, breakdown
Business property 2⃣ Submit claim form, comprehensive
accidental furniture, computers, • War, nuclear
All Risk • Theft, burglary, estimates, photos than standard fire
physical loss or etc. risks
Policy fire, explosion, 3⃣ Surveyor or property policy.
damage to • Usually taken by SMEs • Fraud,
(BAR) natural calamities assessment • Policy term:
business assets, and offices deliberate acts
• Machinery 4⃣ Claim approved & typically 1 year.
except specific • Flexible sum insured • Consequential
breakdown paid
exclusions. options losses
1⃣ Notify insurer upon
Protects • Intentional acts • Also known as
• Covers financial loss to receipt of
professionals or fraud E&O (Errors &
Profession • Negligence or clients due to insured’s complaint/legal notice
against legal • Bodily Omissions)
al mistake in services professional error 2⃣ Submit claim form
liability arising injury/property insurance.
Indemnity • Errors/omissions • Applicable to doctors, & evidence
from errors, damage • Required by
Policy (PI / in advice or design lawyers, engineers, 3⃣ Insurer appoints
negligence, or • Contractual many regulatory
Errors & • Legal defense accountants, consultants legal counsel
omission in liability bodies (e.g., SEBI
Omissions) costs • Claims-made basis 4⃣ Claim settled based
professional • Fines or for investment
policy on defense cost or
duties. penalties advisors).
compensation
 Business Risk & Liability Insurance

Type of Meaning / Exclusions /

Coverage Key Features Claim Procedure Remarks / Key Points
Insurance Objective Limitations
Protects
• 1⃣ Notify insurer upon
company • Breach of duty, • Covers defense • Protects personal assets
Fraudulent/intention legal notice or
directors and negligence costs, settlements, of directors/officers.
Directors al acts investigation
senior officers • Misstatement, error, damages • Crucial for listed
and Officers • Personal profit or 2⃣ Submit details of
from personal omission • Claims-made basis companies, startups, and
(D&O) gain allegations
liability arising • Regulatory • Can extend to NBFCs.
Liability • Bodily 3⃣ Legal defense
from wrongful investigation costs company • May include “Entity
Policy injury/property arranged
acts in • Employment-related reimbursement (Side Securities Coverage” for
damage 4⃣ Claim settled post
managerial claims B cover) public companies.
• Prior known claims judgment/negotiation
capacity.
• Employer =
• Death due to • Tax treatment:
A life insurance proposer & 1⃣ Claim on
• Death or disability of suicide (first year) – Premium not deductible
policy taken by a beneficiary death/disability
key employee • Intentional self- under Sec. 37(1)
business on the • Key person = 2⃣ Submit policy docs,
Keyman • Loss of profits, injury – Claim amount taxable
life of a key insured life medical/death
Insurance goodwill, or expertise • War/nuclear perils under Sec. 28(vi).
employee whose • Premiums paid by certificate
• Recruitment/training • Change in keyman • Helps ensure business
loss can cause company 3⃣ Insurer settles to
cost of replacement role (requires continuity after loss of key
financial harm. • Benefits received employer
endorsement) personnel.
by company
 Business Risk & Liability Insurance

Basis of
Policy Type Primary Objective Policyholder Beneficiary Type of Cover
Settlement
General protection
Insurance of
from operational Business entity Business Indemnity Actual loss
Business Risk
risks
Business Liability Compensation/legal
Third-party liability Business Third party Indemnity
Insurance expenses
All accidental
Business All Risk
losses except Business Business Indemnity Actual physical loss
Policy
exclusions
Professional Negligence/errors Legal defense +
Individual / firm Third party Indemnity
Indemnity by professionals compensation
Wrongful acts by Defense +
D&O Liability Company Directors/Officers Indemnity
directors/officers compensation
Financial loss due
Sum assured
Keyman Insurance to death/disability of Employer Employer Benefit
payout
key employee
 Unit 5 – Concept of Insurance and Risk Management
Chapter 5 – Regulatory Framework on Insurance

Presented By :

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