Page 57 - DCOM309_INSURANCE_LAWS_AND_PRACTICES

Insurance Laws and Practices

Notes 3. Aviation Insurance: It covers the cargo and passengers liability travelling by air.
4. Personal Accident: It includes health and overseas Medical insurance.
5. Motor Insurance: It covers the private and commercial vehicles against damages and
destruction.
6. Third Party Liability: It is insurance of third party against suffering caused to them due to
mistakes of person driving the vehicle. This insurance is compulsorily provided with
other kind of insurances related to vehicles to safeguard the interest of people on road.
7. Miscellaneous Policies: These policies include insurance like plate glass, burglary, cash in
transit, fidelity guarantee, etc.
Some non-life insurance policies issued in modern times are as follows:
1. Property Insurance: Fire, theft, engineering and miscellaneous accidents.
2. Personal Insurance: Personal accident, health insurance.

3. Motor/Vehicle Insurance: All types.
4. Liability Insurance: All types – public, product, professional and employers.
5. Pecuniary Insurance: Fidelity guarantee, credit insurance.
6. Interruption Insurance: Arising out of fire and engineering risks.

7. Rural Insurance: Non-traditional policies.
General insurance contracts are yearly contracts and are based on the indemnity principle. This
makes a difference in the premium rating, which is also complicated as more variables are taken
into account than in life insurance. In general insurance also, some policies insuring the life and
health of person are issued but they are all annual contracts. They are benefit policies unlike
other general insurance products, which are based on indemnity.
The reason for general insurance contracts being annual is that the subject matter insured, is
subject to change. It may undergo visible wear and tear and may depreciate, even may suffer
from loss of value, become obsolete, out-of-fashion or difficult to service, etc. So the calculations
are preferably on annual basis. This makes the contract easier to make and to implement.

!
Caution In case of general insurance is that the premium paid gets expired once the year
has passed. Meaning that there is no return of the premium or a part thereof if the peril
insured against does not occur. No damages, no claim. This is reverse to life insurance
where the claim is paid on maturity if death does not occur within the policy period.

Other Classifications of Insurance

You need to know that there are various insurance policies cover a wide variety of approaches
to share and transfer risks. Types of insurance can be divided and subdivided according to the
perils insured against a particular event. It can be broadly divided into personal insurance,
property insurance, liability insurance, casualty insurance, marine insurance, aviation and motor
coverage.
Personal Insurance: The risk of individuals and families are covered under personal insurance.
Examples are life insurance, pensions, accidents, sickness, old age coverage, etc. Personal insurance
is designed to protect against two distinct risks—premature death and living too long. People

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