General Insurance

01. Meaning & Scope of General Insurance

General insurance protects against specified financial losses affecting property, vehicles, liability, marine cargo, travel, agriculture and other non-life exposures. The insurer’s obligation depends on insured perils, exclusions, limits and policy conditions.

Applied learning: A loss is not automatically covered merely because a policy exists; the event, interest, period, sum insured and exclusions must all be examined.

02. Insurance Principles & Indemnity

Core principles include utmost good faith, insurable interest, indemnity, proximate cause, contribution and subrogation. Their application depends on the policy, governing law and relevant judicial interpretation.

Applied learning: Indemnity generally aims to restore the insured’s financial position immediately before a covered loss, not create a profit.

03. Indian General Insurance Ecosystem

India’s non-life insurance market includes general insurers, standalone health insurers, reinsurers, intermediaries, surveyors, brokers, agents and policyholders. IRDAI regulates authorised insurers and intermediaries under applicable law.

Applied learning: Insurance distribution must be separated from underwriting: an intermediary does not automatically bear the claims risk.

04. Motor Insurance – Legal Framework

Motor insurance comprises third-party liability cover and optional own-damage cover. Third-party protection is mandated for vehicles used in public places under the Motor Vehicles Act, while own-damage coverage is a distinct contractual choice.

Applied learning: A third-party-only policy is not the same as comprehensive/package insurance. Liability limits and personal accident provisions must be checked against applicable rules.

05. Motor Own Damage, IDV & Depreciation

Own-damage policies can cover specified accidental, natural and other causes of vehicle loss, subject to exclusions, deductibles and depreciation schedules. Insured Declared Value is important in total loss and constructive total loss contexts.

Applied learning: An IDV of ₹8 lakh does not promise ₹8 lakh payment for every partial repair: the actual indemnifiable loss and contract apply.

06. Motor Claims, NCB & Add-ons

Common add-ons can include zero-depreciation, engine protection, return-to-invoice and roadside assistance. Scope, eligibility and exclusions vary by product. No-claim bonus typically concerns the own-damage premium rather than third-party premium.

Applied learning: A claim under one coverage component may have different consequences from a claim under another: check the policy’s no-claim bonus conditions.

07. Fire Insurance & Standard Fire Perils

Property fire insurance addresses defined insured perils such as fire and allied events under the chosen wording. Building, plant, machinery, stocks and contents may be insured under separate declared values and conditions.

Applied learning: A shop’s fire cover does not automatically include flood, earthquake, theft or business interruption unless the policy covers them.

08. Bharat Griha Raksha & Home Insurance

Standard home-protection products provide specified coverage for eligible residential buildings and contents, subject to the applicable policy wording. Optional extensions and claim settlement mechanisms should be compared before purchase.

Applied learning: Home insurance values, automatic cover features, and underinsurance treatments depend on the selected product; do not apply rules from one standard product to all policies.

09. Bharat Sookshma Udyam & Laghu Udyam

IRDAI’s standard fire and allied peril products for eligible business risks include Bharat Sookshma Udyam Suraksha and Bharat Laghu Udyam Suraksha. Eligibility is linked to risk and property-value criteria in operative product wording.

Applied learning: Use the current product eligibility definition rather than assuming that the business’s MSME registration alone determines the relevant fire policy.

10. Property Valuation & Average Clause

Property insurance can use market value, reinstatement value or agreed value depending on the contract. An average clause may proportionately reduce an eligible partial-loss claim where the property is underinsured.

Applied learning: Illustration: value ₹10 lakh, sum insured ₹6 lakh, covered loss ₹2 lakh; if average applies without other adjustment, claim before deductible is ₹1.2 lakh.

11. Burglary, Theft & Money Insurance

Burglary and theft policies can differ significantly in definitions, force-and-violence requirements, exclusions and security warranties. Money insurance covers specified cash movements or locations subject to policy restrictions.

Applied learning: A theft occurring without forcible entry may not satisfy a burglary policy’s insured-event wording; always read its definition.

12. Marine Cargo Insurance

Marine cargo insurance protects goods against named or broad transit risks under selected Institute Cargo Clauses or other applicable wording. Incoterms determine commercial delivery obligations but do not themselves confer insurance cover.

Applied learning: ICC(A) is broader than ICC(B)/(C), but it is not literally ‘all risks’ without exclusions. War and strikes often require separate cover.

13. Marine Hull & Shipping Insurance

Hull policies address damage to ships and machinery, while protection and indemnity arrangements address specified third-party marine liabilities. Insured interests, navigational limits, seaworthiness and exclusions are crucial.

Applied learning: Cargo, hull and marine liability are different insured interests; insuring goods does not insure the vessel carrying them.

14. Export Credit & Trade Risk Insurance

Export credit insurance protects eligible exporters or lenders against specified buyer non-payment and certain political or commercial risks. Product coverage and exclusions must be distinguished from letters of credit and bank guarantees.

Applied learning: Credit risk cover is not blanket protection against every contract dispute or delivery failure; compliance with declaration and recovery duties matters.

15. Travel Insurance

Travel insurance may combine emergency medical expense, trip cancellation, lost baggage, travel delay, personal accident and liability modules. Coverage typically depends on destination, dates, pre-existing condition definitions and claim evidence.

Applied learning: Emergency medical cover abroad is not equivalent to routine elective treatment, and a visa-required minimum is not necessarily adequate insurance.

16. Personal Accident & Disability Cover

Personal accident cover typically pays defined benefits for accidental death or specified permanent/temporary disabilities. Benefit-based sums are different from indemnity reimbursement and require careful interpretation of disability tables.

Applied learning: Two policies may define ‘permanent total disability’ differently. Claim amount depends on the schedule and percentage assigned to the event.

17. Health Insurance – Non-life Interface

Health insurance is a non-life/health sector product area covering medical expenses or specified benefit events. Indemnity health policies differ from fixed-benefit policies; standalone health insurers also operate in India.

Applied learning: Cashless does not mean unlimited payment: network arrangements, admissibility, sum insured, co-pay and exclusions still apply.

18. Agricultural & Crop Insurance

Crop insurance helps cover specified yield or weather-related losses for eligible crops and farmers under scheme or product conditions. PMFBY and weather-based programmes have different triggers and claim mechanics.

Applied learning: A low crop price is not automatically a covered crop-yield loss. Trigger, season, notified crop and geographical unit matter.

19. Cattle, Livestock & Rural Insurance

Livestock and rural policies protect specified animal, equipment, dwelling or rural enterprise risks. Identification, veterinary certification, insured-event definitions and exclusions materially affect claims.

Applied learning: Cattle mortality claims often require identification records and veterinary evidence; ordinary ageing is not necessarily an insured peril.

20. Engineering & Construction Insurance

Engineering policies include contractor’s all risk (CAR), erection all risk (EAR), machinery breakdown and electronic equipment covers. Insured project phases, testing, defect exclusions and maintenance extensions vary.

Applied learning: CAR protects defined construction risks, while EAR is commonly used for erection and installation projects; neither automatically covers every faulty workmanship cost.

21. Business Interruption & Consequential Loss

Business interruption insurance responds to defined financial consequences of an insured physical damage event, subject to the material-damage proviso, chosen indemnity period and method of calculation.

Applied learning: Lost revenue is not identical to insured gross profit. A claim requires adjustment for saved expenses, trends and policy definitions.

22. Liability Insurance & Third-Party Claims

Liability policies cover specified legal liabilities to third parties, depending on trigger, jurisdiction and exclusions. Public liability, product liability, professional indemnity and directors’ and officers’ cover target different exposures.

Applied learning: Legal liability is not established merely because an incident occurred; causation, negligence or applicable statutory liability, and defence conditions may matter.

23. Cyber Insurance

Cyber policies may cover eligible incident response, data restoration, business interruption, privacy liability and breach-related costs. Coverage is sensitive to security warranties, waiting periods, deductibles and exclusions.

Applied learning: Paying a cyber premium does not replace multifactor authentication, backups and incident preparedness; weak controls may affect coverage.

24. Commercial Crime & Fidelity Guarantee

Fidelity guarantee and commercial crime policies can respond to specified employee dishonesty, forgery, fraud and funds transfer risks. Covered persons, discovery periods and exclusions need careful evaluation.

Applied learning: Not every accounting discrepancy is insured employee fraud; the policy may require proof of dishonest intent and direct financial loss.

25. Reinsurance & Risk Transfer

Reinsurance allows insurers to transfer part of their insured risk to reinsurers. Treaty and facultative arrangements differ, as do proportional and non-proportional structures. The original insurer remains responsible to its policyholder under the direct contract.

Applied learning: A 40% quota-share treaty often allocates proportional premium and losses, subject to treaty conditions; stop-loss cover responds beyond defined thresholds.

26. Underwriting, Rating & Premium

Non-life underwriting evaluates exposure, hazard, claims history, security measures, location, vehicle use and coverage terms. Premium may be derived from expected loss cost, expenses, uncertainty margin and other permitted factors.

Applied learning: Illustration: premium base ₹12,000 less 10% discount plus 18% GST gives ₹12,744, assuming tax applicability and no other adjustments.

27. Claims, Surveyors & Loss Adjustment

Claims follow notification, documentation, assessment, admissibility decision, quantification and settlement/repudiation subject to regulations and contract terms. Surveyor involvement, repair bills and salvage affect property claims.

Applied learning: The insurer assesses whether a loss is covered before applying the sum insured, excess, depreciation, salvage or other deductions.

28. Deductible, Excess, Franchise & Coinsurance

A deductible/excess typically reduces a payable claim by a specified amount; a franchise may operate differently under its wording. Coinsurance can refer to loss-sharing, and average can apply for underinsurance. Terms vary by product.

Applied learning: Example: an admissible ₹80,000 claim with ₹10,000 deductible produces ₹70,000 before other policy limits; no other deductions assumed.

29. Insurance Ratios & Technical Accounts

Common non-life metrics include incurred claims ratio, loss ratio, expense ratio, combined ratio, earned premium, incurred but not reported (IBNR) reserves and solvency measures. Definitions differ by regulatory/reporting context.

Applied learning: Illustration: claims ₹75 crore ÷ net earned premium ₹100 crore = 75% claims ratio on that defined basis; never compare ratios with mismatched denominators.

30. IRDAI Regulation & Policyholder Rights

IRDAI regulates insurance business, product governance, distribution, solvency and policyholder protection through legislation and current regulations/circulars. The Customer Information Sheet summarises key policy conditions for consumers.

Applied learning: A free-look period must not be described as universally applicable to all non-life property or motor covers; check the applicable product and regulation.

31. Complaints, Ombudsman & Consumer Protection

A policyholder should first raise a documented complaint with the insurer. Where eligible, unresolved matters may be taken through IRDAI’s Bima Bharosa mechanisms and the Insurance Ombudsman, subject to jurisdiction and current rules.

Applied learning: Neither an insurer’s customer-care promise nor a policy brochure replaces the operative claim conditions and grievance eligibility rules.

32. Applied Case Studies & Exam Numericals

Exam problems should state the insured event, sum insured, market value, loss, deductible and applicable clauses. Work each adjustment in order, rather than memorising one generic ‘claim formula’ for every insurance product.

Applied learning: Illustration: insured value ₹8 lakh, sum insured ₹6 lakh, partial covered loss ₹2 lakh, average applies: ₹1.5 lakh before deductible. With ₹10,000 deductible, ₹1.4 lakh.

Worked numerical cases

Underinsurance: Insurable value ₹10,00,000, declared sum insured ₹6,00,000, admissible loss ₹2,00,000. If an average clause applies: ₹6,00,000 ÷ ₹10,00,000 × ₹2,00,000 = ₹1,20,000 before deductibles.

Deductible: Eligible gross claim ₹80,000 less applicable deductible ₹10,000 = ₹70,000 before any other adjustments.

Combined ratio: Loss ratio 72% + expense ratio 24% = 96% on a consistent accounting basis; this does not include every component of overall insurer profitability.

Premium example: Illustrative base ₹12,000; 10% discount leaves ₹10,800. If GST is 18% for the specified taxable product, total = ₹12,744. Actual GST treatment and premium change with prevailing rules.

33. Frequently Asked Questions

Frequently confused concepts include third-party versus own-damage cover, indemnity versus benefit policies, fire versus burglary, IDV versus sum insured, and cashless versus guaranteed payout. Product schedules must control the answer.

Applied learning: Check the policy document before relying on a broad insurance definition in a real claim.

34. Official References & Further Learning

Use IRDAI regulations, the Insurance Act, Motor Vehicles Act, official policy wordings, insurer product information and government crop-insurance sources when checking legal or changing details. Treat examples as learning illustrations, not quotations of current insurer rates.

Applied learning: A published ‘as of’ date must accompany changing premiums, tariffs, limits, compliance directions and regulatory figures.

1. IRDAI official website
2. IRDAI Insurance Statistics handbook
3. IRDAI Health Insurance Products
4. IRDAI Bima Bharosa
5. India Code (Insurance Act, Motor Vehicles Act)
6. Pradhan Mantri Fasal Bima Yojana