PRACTICE OF GENERAL INSURANCE

Study notes for

BBA (B&I) VI Semester

Compiled By: Manoj Verma

Assistant Professor (Sr. Scale) Maharaja Agrasen Institute of Management Studies Maharaja Agrasen Chowk, Sector - 22, Rohini, Delhi 110086 Contact : [email protected]

INTRODUCTION
Man has always been in search of security and protection from the beginning of civilization. At the same time Risk is inevitable in life and any business activity. Again risk is closely connected with ownership. It is the owners who want to save themselves from risk and it is out of this desire, the concept of insurance has originated. The aim and objective of insurance is to protect the owner from financial losses that he suffers for the risks that he has taken. The basis of insurance is sharing of losses of a few amongst many. Insurance provides financial stability and security to both individuals and organizations by this distribution of losses of a few among many by building up a fund over a period of time. In short, insurance is an important aid to minimize the effect of uncertainties of life as well as property. With the increasing complexities in our personal and professional life, the range of risks that the insurance companies accept has also expended substantially. The broadest classification of insurance is in terms of Life Insurance and non-Life Insurance (General insurance).

A non-life insurance contract is different from a life insurance contract. A life insurance contract is a long term contract, while general insurance contract is a one-year renewable contract. The risk namely 'death' is certain in life insurance. The only uncertainty is as to when it will take place, whereas in general insurance, the insured event may or may not take place. It is difficult to determine the economic value of life, whereas the financial value of any asset to be insured under a general insurance policy can be determined. Because of these peculiar features, a non life insurance contract is different from a life insurance contract. In this lesson we will learn in detail the treatment of each type of non-life

insurance.

Section 2(6B) of the Insurance Act 1938, defines general insurance business. According to this general insurance business means fire, marine, or miscellaneous insurance whether carried separately or in combination. General Insurance Corporation of India (GIC) was set up with exclusive privilege for transacting General Insurance business. After the passage of IRDA Act 1999, GIC has been delinked from its subsidiaries and has been assigned the role of Indian reinsurer.

Meaning & Importance of General Insurance

Non-life insurance refers to the property and liability insurance. Fire insurance covers stationary property. Marine insurance covers mobile property. Bonding is a special coverage that guarantees the performance of the contract by one party to another. Casualty coverage includes accident and health insurance besides the above mentioned categories. Miscellaneous Insurance business means all other general insurance contracts including therein motor insurance.

The role of insurance is twofold. Insurance achieves both risk transfer and risk reduction. The insurer collects the premium from a group of business firms who wants to protect their property against the damage caused by fire. Insurer will then indemnify the firm that suffers a loss to property due to fire out of the premium so collected. So the collective contributions of this entire group of the insured have been utilized to pay for the losses of the unfortunate few who sustain losses.

Insurance also acts as a risk reduction mechanism in various senses. Firstly, the individual risks have been shifted to the insurance company by way of pooling. Secondly, firm's risk exposure is well spread out because insurer has an access to the reinsurance market making possible a further spread of risk. If an aircraft is destroyed, the airline company will have a big hole in its financials. If the aircraft is insured, the loss would be spread out among a large number of insurance companies throughout the world.

Every business enterprise is exposed to a large number of risks and uncertainties to its premises, plant and machinery, raw materials, finished stock and other things. Goods may be damaged or lost in the process of transportation and may be destroyed due to fire or flood while in storage. As a matter of fact, business means risk and uncertainties. Some of the risks can be avoided by timely precautions but some are unavoidable and are beyond the control of a businessman. For those types of risks, Insurance is the best protection. By providing protection against at least some of these risks, the insurance industry helps him better manage his risks and contributes to capital formation in the economy. After transferring risks and uncertainties of the business to the insurance company, the entrepreneur can focus on his core activity- of running the business. Also, the insurance companies bring their experience and expertise to the field of risk management. Thus, they are able to add value to the customer's business processes.

HISTORY OF GENERAL INSURANCE

Globally, the history of general insurance can be traced back to the early civilization. As the incidence of losses increased with the advancement of civilization, slowly the idea and concept of loss pool and loss sharing started taking roots. Historical facts show that the Aryans through their cooperatives practiced

the loss of profits insurances. The Mediterranean merchants also practised insurances from as early as the 4th century BC through the issue of bottomry bonds, which is an advance of money in a ship during the period of voyage, repayable on the arrival of the ship. The Code of Manu also indicates the practice of marine insurance by Indian with their counter parts in SriLanka, Egypt and Greece. Marine insurance is the oldest type of insurance originating in England, as early as in the 12th century. The earliest transaction of insurance as practised today can be traced back to the 14th century AD in Italy. General insurance as a whole, developed with the industrial revolution in the West and with the consequent growth of seafaring trade and commerce in the seventh century. In India too, evidence of insurance in some form can be traced as early as from the Aryan period. The British and some of the other foreign insurance companies through their agencies transacted insurance business in India. The first general insurance company in India was the Triton Insurance company Ltd., established in Calcutta in 1850 AD, with the British holding major share. The first general insurance company by Indian promoters was the Indian Mercantile Insurance company Ltd. started in Bombay in 1906-07. Following the First World War, several foreign insurance companies started insurance business in India, capturing about 40 percent of the insurance market in India at the time of Independence.

Insurance business in India is governed by the Insurance Act of 1938, which was amended later in 1969. However, in 1971, the government by an ordinance nationalized the general insurance business, under the General insurance Nationalization Act, 1972 to ensure orderly and healthy growth of the business. The then existing 107 companies were brought under the aegis of General Insurance Corporation (GIC) of India. The GIC was thus entrusted with the responsibility of superintending, controlling, and ensuring smooth and healthy

conduct of the general insurance business in India along with its four subsidiaries in all the zones in India.

THE INSURANCE MARKET IN INDIA

A contract of insurance can be defined as a contract whereby one person, called the insurer undertakes in return for a consideration, called the premium, to pay to another person called assured, a sum of money or its equivalent on the happening of a specified event. The happening of the specified event must involve some loss to the assured or at least should expose him to adversity, which in insurance parlance is called risk. The underlying concept of insurance is to transfer the loss suffered by an individual to a willing and capable professional.

Providers The Insurance market comprises the insurers, the buyers, and the intermediaries who mediate between the two parties and are rewarded for their efforts by the insurer. The insurance market in India hitherto consisted of the General Insurance Corporation of India (GIC) and its four subsidiaries namely: National Insurance Co. Ltd. with Head Office in Kolkata. United India Insurance Co. Ltd. with Head Office in Chennai. The New India Assurance Co. Ltd. with Head Office in Mumbai. The Oriental Insurance Co. Ltd. with Head Office in New Delhi The GIC was formed on 1st January, 1973, under the Insurance Act, 1938 in accordance with the provisions of the General Insurance Business (Nationalization) Act, 1972. All the existing companies carrying on general insurance business in India were merged under Section 16 of the Nationalization Act, and notified by the

government on 31.12.1972. Thus, from 1.1.1973, the four subsidiaries of GIC as mentioned above started insurance operations. A brief review of the four public sector companies as subsidiaries of GIC under the nationalization program in chronological order is examined in the following paragraphs. National Insurance Company is one of the four public sector companies. Since its incorporation in the year 1906 headquartered in Kolkata, the company had been carrying out general insurance business under private management until 1972, the year of its nationalisation. In the same year, 21 foreign and 11 Indian Insurance Companies were amalgamated with National Insurance Company Limited, as a subsidiary company of General Insurance Corporation of India. The New India Assurance Company was incorporated on 23rd July, 1919 and commenced business from 14th October, 1919 with head office in Mumbai. In 1972, the year of its nationalisation, Government of India took over the management of the company along with all other non-life insurers in the country. New India Assurance (NIA) was subsequently reconstituted taking over 23 companies under the Scheme of Merger, following the nationalization of General Insurance Business in 1973. United India Insurance Company Limited was incorporated as a Company on 18th February 1938 with its head office in Chennai, with 12 Indian Insurance Companies, 4 Cooperative Insurance Societies and Indian operations of 5 Foreign Insurers, besides General Insurance operations of southern region of Life Insurance Corporation of India were merged with United India Insurance Company Limited. The Oriental Fire & General Insurance Co. Ltd., with its head office in New Delhi was incorporated in the year 1947 as a subsidiary of Oriental Government Security Life Assurance Co. Ltd. In 1956, Oriental became a subsidiary of the Life Insurance Corporation of India until 13th May 1971, when

the Government of India (GOI) took over the management of all general insurance companies in India. This was followed by the nationalization of general insurance business with effect from 1st January 1973 and the Oriental Fire and General insurance company came under the General Insurance Corporation of India as one of the four subsidiaries. It commenced its operations from 1st January 1975. Later on in 2002, with the passage of Insurance amendment Bill (2002), all the four Public sector companies were delinked from GIC and are functioning as independent companies since then. Following convergence of the financial services and financial institutions, the Indian government also initiated reforms based on the recommendations made in the Report of the Malhotra Committee, set up in 1993. As a result, the insurance sector was opened up to private participation to make the sector efficient, vibrant, and competitive. At present, the Insurance Regulatory and Development Authority (IRDA), is the statutory body entrusted with the responsibility of regulation of operations of the insurance companies as well ensuring orderly development and growth of the insurance business in India. The primary concern of the IRDA is the protection of the policyholders interest.

Buyers The buyers in the insurance market are the general public, traders, exporters, importers, industrial and commercial organizations, clubs, associations, hospitals, schools, etc. The intermediaries are the agents, and now-a-days new channels include brokers, corporate agents and financial institutions like banks (Bancassurance), micro-finance institutions etc. All the intermediaries are to be duly licensed by the Insurance Regulatory and Development Authority (IRDA).

Intermediaries Insurance companies sell their products mainly through the following: i. Agents (who are the representatives of the Insurer) ii. Independent Intermediaries (who are the representatives of the Buyer) iii. Direct Sales including through online and Referrals.

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TYPES OF GENERAL INSURANCE

1) MARINE INSURANCE
Insurance on the risks of transportation of goods is one of the oldest and most vital forms of insurance. The value of goods shipped by business firms each year cost millions of rupees. These goods are exposed to damage or loss from numerous transportation perils. The goods can be protected by marine insurance contracts. It is an important element of general insurance. It essentially provides cover from loss suffered due to marine perils. In India the marine insurance is regulated by the Indian Maritime Insurance Act 1963, which is based on the original English Act.

HISTORY OF MARINE INSURANCE Marine insurance as we know it today can be described as mother of all insurances. It is believed to have originated in England owing to the frequent movement of ships over high seas for trade. In India, insurance has been in vogue for several centuries. History holds proof that these people had a system of pooling their contributions, if any one of their clan were to meet a tragedy in their voyages. Today marine insurance has assumed a vast canvas due to the expanding trade across the globe, which involves large shipping companies that require protection for their fleet against the perils of the sea.

Definition Marine insurance is a contract under which, the insurer undertakes to indemnify the insured in the manner and to the extent thereby agreed, against marine losses,

incidental to marine adventures. It may be defined as a form of insurance covering loss or damage to vessels or to cargo during transportation to the high seas. It follows from the above discussion the marine insurance is a contract between the insured and the insurer. The insured may be a cargo owner or a ship owner or a freight receiver. The insurer is known as the underwriter. The document in which the contract is incorporated is called "Marine policy". The insured pays a particular sum, which is called premium, in exchange for an undertaking from the insurer to indemnify the insured against loss or damage caused by certain specified perils.

The salient features of a contract of marine insurance are as follows:

1. It is based on utmost good faith. Both the insured and the insurer must disclose everything which is in their knowledge and can affect the contract of insurance.

2. It is a contract of indemnity. The insured is entitled to recover only the actual amount of loss from the insurer.

3. Insurable interest in the subject-matter insured must exist at the time of the loss. It need not exist when the insurance policy is taken. Under marine insurance, the following persons are deemed to have insurable interest: a) The owner of the ship. b) The owner of the cargo. c) A creditor who has advanced money on the security of the ship or cargo. d) The mortgagor and mortgagee. e) The master and crew of the ship have insurable interest in respect of their

wages. f) In case of advance freight, the person advancing the freight has an insurable interest if such freight is not repayable in case of loss.

4. It is subject to the doctrine of causa proxima. Where a loss is brought by several causes in succession to one another, the proximate or nearest cause of loss must be taken into account. If the proximate cause is covered by the policy, only then the insurance company will be liable to compensate the insured.

5. It must contain all the essential requirements of a valid contract, e.g. lawful consideration, free consent, capacity of the parties, etc.

MEANING OF MARINE PERILS Maritime perils can be defined as the fortuitous (an element of chance or ill luck) accidents or casualties of the sea caused without the willful intervention of human agency. The perils are incidental to the sea journey that arises in consequence of the sea journey. There are different forms of perils, of which only a few are covered by insurance while others are not. Accordingly we have insured and uninsured perils.

Insured perils are storm, collision of one ship with another ship, against rocks, burning and sinking of the ship, spoilage of cargo from sea water, mutiny, piracy or willful destruction of the ship and cargo by the master (captain) of the ship or the crew, jettison etc. Uninsured perils are regular wear and tear of the vessel, leakage (unless it is caused by an accident), breakage of goods due to bad movement of the ship, damage by rats and loss by delay. All losses and damages caused due to reasons

not considered as perils of the sea are not provided insurance cover.

SUBJECT MATTER OF MARINE INSURANCE The insured may be the owner of the ship, owner of the cargo or the person interested in freight. In case the ship carrying the cargo sinks, the ship will be lost along with the cargo. The income that the cargo would have generated would also be lost. Based on this we can classify the marine insurance into three categories:

(a) Hull Insurance Hull refers to the ocean going vessels (ships trawlers etc.) as well as its machinery. The hull insurance also covers the construction risk when the vessel is under construction. A vessel is exposed to many dangers or risks at sea during the voyage. An insurance effected to indemnify the insured for such losses is known as Hull insurance.

(b) Cargo Insurance Cargo refers to the goods and commodities carried in the ship from one place to another. The cargo transported by sea is also subject to manifold risks at the port and during the voyage. Cargo insurance covers the shipper of the goods if the goods are damaged or lost. The cargo policy covers the risks associated with the transshipment of goods. The policy can be written to cover a single shipment. If regular shipments are made, an open cargo policy can be used that insures the goods automatically when a shipment is made.

(c) Freight Insurance Freight refers to the fee received for the carriage of goods in the ship. Usually the

ship owner and the freight receiver are the same person. Freight can be received in two ways- in advance or after the goods reach the destination. In the former case, freight is secure. In the latter the marine laws say that the freight is payable only when the goods reach the destination port safely. Hence if the ship is destroyed on the way the ship owner will loose the freight along with the ship. That is why, the ship owners purchase freight insurance policy along with the hull policy.

(d) Liability Insurance It is usually written as a separate contract that provides comprehensive liability insurance for property damage or bodily injury to third parties. It is also known as protection and indemnity insurance which protects the ship owner for damage caused by the ship to docks, cargo, illness or injury to the passengers or crew, and fines and penalties.

TYPES OF MARINE POLICY There are different types of marine policies known by different names according to the manner of their execution or the risk they cover. They are:

1. Voyage Policy Under the policy, the subject matter is insured against risk in respect of a particular voyage from a port of departure to the port of destination, e.g. Mumbai to New York. The risk starts from the departure of ship from the port and it ends on its arrival at the port of destination. This policy covers the subject matter irrespective of the time factor. This policy is not suitable for hull insurance as a ship usually does not operate over a particular route only. The policy is used mostly in case of cargo insurance.

2. Time Policy It is one under which the insurance is affected for a specified period of time, usually not exceeded twelve months. Time policies are generally used in connection with the insurance of ship. Thus if the voyage is not completed with in the specified period, the risk shall be covered until the voyage is completed or till the arrival of the ship at the port of call.

3. Mixed Policies It is one under which insurance contract is entered into for a certain time period and for a certain voyage or voyages, e.g., Kolkata to New York, for a period of one year. Mixed Policies are generally issued to ships operating on particular routes. It is a mixture of voyage and time policies.

4. Valued Policies It is one under which the value of subject matter insured is specified on the face of the policy itself. This kind of policy specifies the settled value of the subject matter that is being provided cover for. The value which is agreed upon is called the insured value. It forms the measure of indemnity in the event of loss. Insured value is not necessarily the actual value. It includes (a) invoice price of goods (b) freight, insurance and other charges (c) ten to fifteen percent margin to cover expected profits.

5. Unvalued policy It is the policy under which the value of subject matter insured is not fixed at the time of effecting insurance but has to be ascertained wherever the subject matter is lost or damaged.

6. Open policy An open policy is issued for a period of 12 months and all consignments cleared during the period are covered by the insurer. This form of insurance Policy is suitable for big companies that have regular shipments. It saves them the tedious and expensive process of acquiring an insurance policy for each shipment. The rates are fixed in advance, without taking the total value of the cargo being shipped into consideration. The assured has to declare the nature of each shipment, and the cover is provided to all the shipments. The assured also deposits a premium for the estimated value of the consignment during the policy period. .

6. Floating Policy A merchant who is a regular shipper of goods can take out a 'floating policy' to avoid botheration and waste of time involved in taking a new policy for every shipment. This policy stands for the contract of insurance in general terms. It does not include the name of the ship and other details. The other details are required to be furnished through subsequent declarations. Thus, the insured takes a policy for a huge amount and he informs the underwriter as and when he makes shipment of goods. The underwriter goes on recording the entries in the policy. When the sum assured is exhausted, the policy is said to be "fully declared" or "run off".

7. Block Policy This policy covers other risks also in addition to marine risks. When goods are to be transported by ship to the place of destination, a single policy known as block policy may be taken to cover all risks. E.g. when the goods are dispatched by rail or road transport for shipment, a single policy may cover all the risks from the point of origin to the point of destination.

ASSIGNMENT OF MARINE POLICY A marine insurance policy may be transferred by assignment unless the terms of the policy expressly prohibit the same. The policy may be assigned either before or after loss. The assignment may be made either by endorsement on the policy itself or on a separate document. The insured need not give a notice or information to the insurer or underwriter about assignment. In case of death of the insured, a marine policy is automatically assigned to his heirs.

At the time of assignment, the assignor must possess an insurable interest in the subject matter insured. An insured who has parted with or lost interest in the subject matter insured cannot make a valid assignment. After the occurrence of the loss, the policy can be assigned freely to any person. The assignor merely transfers his own right to claim to the assignee.

CLAUSES IN A MARINE POLICY A policy of marine insurance may contain several clauses. Some of the clauses are common to all marine policies while others are included to meet special requirements of the insured. Hull, cargo and freight policies have different standard clauses. There are standard clauses which are invariably used in marine insurance. Firstly, policies are constructed in general, ordinary and popular sense, and, later on, specific clauses are added to them according to terms and conditions of the contract. Some of the important clauses in a marine policy are described below:

1. Valuation Clause. This clause states the value of the subject matter insured as

agreed upon between both the parties.

2. Sue and Labour clause. This clause authorizes the insured to take all possible steps to avert or minimize the loss or to protect the subject matter insured in case of danger. The insurer is liable to pay the expenses, if any, incurred by the insured for this purpose.

3. Waiver Clause. This clause is an extension of the above clause. The clause states that any act of the insured or the insurer to protect, recover or preserve the subject matter of insurance shall not be taken to mean that the insured wants to forgo the compensation, nor will it mean that the insurer accepts the act as abandonment of the policy.

4. Touch and Stay Clause. This clause requires the ship to touch and stay at such ports and in such order as specified in the policy. Any departure from the route mentioned in the policy or the ordinary trade route followed will be considered as deviation unless such departure is essential to save the ship or the lives on board in an emergency.

5. Warehouse to warehouse clause. This clause is inserted to cover the risks to goods from the time they are dispatched from the consignor's warehouse until their delivery at the consignee's warehouse at the port of destination.

6. Inchmaree Clause. This clause covers the loss or damage caused to the ship or machinery by the negligence of the master of the ship as well as by explosives or latent defect in the machinery or the hull.

7. F.P.A. and F.A.A. Clause. The F.P.A. (Free of Particular Average) clause relieves the insurer from particular average liability. The F.A.A. ( free of all average) clause relieves the insurer from liability arising from both particular average and general average.

8. Lost or Not Lost Clause. Under this clause, the insurer is liable even if the ship insured is found not to be lost prior to the contact of insurance, provided the insurer had no knowledge of such loss and does not commit any fraud. This clause covers the risks between the issue of the policy and the shipment of the goods.

9. Running down Clause. This clause covers the risk arising out of collision between two ships. The insurer is liable to pay compensation to the owner of the damaged ship. This clause is used in hull insurance.

10. Free of Capture and Seizure Clause. This clause relieves the insurer from the liability of making compensation for the capture and seizure of the vessel by enemy countries. The insured can insure such abnormal risks by taking an extra 'war risks' policy. 11. Continuation Clause. This clause authorizes the vessel to continue and complete her voyage even if the time of the policy has expired. This clause is used in a time policy. The insured has to give prior notice for this and deposit a monthly prorate premium.

12. Barratry Clause. This clause covers losses sustained by the ship owner or the cargo owner due to willful conduct of the master or crew of the ship.

13. Jettison Clause. Jettison means throwing overboard a part of the ship's cargo

so as to reduce her weight or to save other goods. This clause covers the loss arising out of such throwing of goods. The owner of jettisoned goods is compensated by all interested parties.

14. At and From Clause. This clause covers the subject matter while it is lying at the port of departure and until it reaches the port of destination. It is used in voyage policies. If the policy consists of the word 'from' only instead of 'at and from', the risk is covered only from the time of departure of the s hi p .

WARRANTIES

Besides the three important principles i.e. good faith, indemnity, and insurable interest, it is necessary that all the marine insurance contracts must fulfil the warranties also. Warrantee means a condition which is basic to the contract of insurance. The breach of which entitles the insurer to avoid the policy altogether. If the warranty is not complied with by the insured, the contract comes to an end. There are two exceptions where the breach of warranty is excused and does not affect that insurer's liability: (i) Where owning to change in the circumstance the warranty is inapplicable and (ii) Where due to enactment of a subsequent law the warranty becomes unlawful. Kinds of Warranties

Warranties are of two types: (i) Express, and (ii) Implied.

An express warranty is one which is expressed or clearly stated in the contract

and it can be easily ascertained whether it has been fulfilled or not. For instance a marine policy usually contains the following express warranties:

(i) The ship will sail on a specified day. (ii) The ship is safe on a particular day. (iii) The ship will proceed to the port of destination without any deviation. (iv) The ship is neutral and will remain so during the voyage.

The implied warranty, on the other hand, is not expressly mentioned in the contract but the law takes it for granted that such warranty exists. An express warranty does not exclude implied warranty unless it is inconsistent therewith. Implied warranties do not appear in the policy documents at all, but are understood without being put into words, and as such, are automatically applicable. These are included in the policy by law, general practice, long established custom or usage. The important implied warranties are discussed below:

(a) Sea-Worthiness of the ship. A ship is sea worthy when it is in a fit condition as to repair, equipment, crew, etc. to encounter the ordinary perils of the voyage. This implies that the ship must be suitably constructed, properly equipped and manned, sufficiently fuelled and provisioned and capable of withstanding the ordinary strain and stress of the voyage. It must not be overloaded.

(b) Legality of Voyage. The journey undertaken by the ship must be for legal purposes. Carrying

prohibited or smuggled goods is illegal and therefore, the insurer shall not be liable for the loss.

Non-deviation of the ship route. It is assumed that the ship will maintain the same route as stated in the policy in ordinary course, but in case of peril it is permitted to deviate. If the ship does not follow the usual route, the insurer will not be liable even if the ship regains her route before any loss takes place. However, the insurer remains liable for any loss which might have occurred prior to the deviation.

TYPES OF MARINE LOSSES

A loss arising in a marine adventure due to perils of the sea is a marine loss. Marine loss may be classified into two categories:

1) Total loss A total loss implies that the subject matter insured is fully destroyed and is totally lost to its owner. It can be Actual total loss or Constructive total loss.

In actual total loss subject matter is completely destroyed or so damaged that it ceases to be a thing of the kind insured. e.g. sinking of ship, complete destruction of cargo by fire, etc.

In case of constructive total loss the ship or cargo insured is not completely destroyed but is so badly damaged that the cost of repair or recovery would be greater than the value of the property saved. e.g. a ship dashed against the rock

and is stranded in a badly damaged position. If the expenses of bringing it back and repairing it would be more than the actual value of the damaged ship, it is abandoned.

2) Partial loss A partial loss occurs when the subject matter is partially destroyed or damaged. Partial loss can be general average or particular average.

General average refers to the sacrifice made during extreme circumstances for the safety of the ship and the cargo. This loss has to be borne by all the parties who have an interest in the marine adventure. e.g. A loss caused by throwing overboard of goods is a general average and must be shared by various parties.

Particular average may be defined as a loss arising from damage accidentally caused by the perils insured against. Such a loss is borne by the underwriter who insured the object damaged. e.g. If a ship is damaged due to bad weather the loss incurred is a particular average loss.

MARINE INSURANCE IN INDIA

There is evidence that Marine Insurance was practiced in India since long time. In earlier days travellers by sea and land were exposed to risk of losing their vessels and merchandise because of piracy on the open seas.

It was the British insurers who introduced general insurance in India, in its modern form. The first company known as the Sun Insurance Office Ltd. was set

up in Calcutta in the year 1710. This followed by several insurance companies of different parts of the world, in the field of marine insurance.

In India marine insurance is transacted by the subsidiaries of the General Insurance Corporation of India- New India Assurance, National Insurance, Oriental Insurance and United India Insurance. Marine and hull insurance contribute 20% to the total premium of the general insurance industry in India.

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2) FIRE INSURANCE
Fire is hazardous to human life as well as property. Loss of life by fire is covered under Life insurance and loss of property by fire is covered under fire insurance. Fire causes enormous damage by physically reducing the materials to ashes.

A fire insurance policy provides protection strictly against fire. There could be enormous reasons for fire. In practice certain other related perils are also covered by the fire insurance policy. The General Insurance Act (Tariff) recommends the form of the contract in which a fire insurance is to be written. The policy form contains a preamble and operative clause, general exclusions and general conditions. Fire insurance is an insurance, which provide protection of property against financial loss or damage caused by fire. It is a contract under which the insurer agrees to indemnity the loss caused by fire to the insured in the consideration of certain payment called premium. Fire insurance comes into existence, when there was huge fire in London in 1666 and destroyed 1/3 of London. In fire insurance, fire means the flames because of which property damage and its should happen suddenly. Generally the insurance company compensates the loss caused by the fire but now its scope become wider and special risk like explosion, riots, violence, Earthquake, etc. also include fire insurance policy.

Fire insurance is a contract under which insured cannot claim anything more than the value of goods lost by fire or insured amount which ever is less. So fire insurance doesnt prevent (control) the fire but it indemnify the loss caused by fire. The fire insurance only covers the security aspects and it is not taken as an investment. For compensation, the insured must proof loss is really due to fire and insured should also satisfy the insurer that there should be actual fire and the fire is an accident. In general practice, it is valid for one year and must be renewed each and every year.

Characteristics: It is a contract under which insured cannot claim anything more than the value of goods or particular damaged by fire or the sum insured whichever is loss. It is based on principle of good faith. The policy is must be renewed each year. The policy of subrogation is preventing in fire insurance. After the payment of damaged goods by the insurer, changed goods are transferred to insurance company. The claim may be settled either in cash or replacement. It is not on investment but it covers the security aspect only.

Fire Insurance comes under tariff class of business. All India Fire Tariff is the revised fire insurance tariff, which came into force on May1, 2001. Now a single

policy was introduced to cover all property risks called standard fire and special peril policy in the place of three standard policies i.e. A, B&C.

DEFINITION A contract of fire insurance can be defined as a contract under which one party ( the insurer) agrees for consideration (premium) to indemnify the other party (The insured) for the financial loss which the latter may suffer due to damage to the property insured by fire during a specified period of time and up to an agreed amount.

The document containing the terms and conditions of the contract is known as 'Fire Insurance Policy'. A fire policy contains the name of the parties, description of the insured property, the sum for which the property is insured, amount of premium payable and the period insured against. The premium may be paid either in single instalment or by way of instalments.

The insurer is liable to make good the loss only when loss is caused by actual fire. The phrase 'loss or damage by fire' also includes the loss or damage caused by efforts to extinguish fire.

Scope of cover Standard Fire and special perils policy usually cover loss due to the following perils: 1. Fire Destruction or damage to the property insured by its own fermentation, natural heating or spontaneous combustion or drying process can not be treated as damage due to fire.

2. Lightning It may result in fire damage or other type of damage, such as cracks in a building due to a lightning strike.

3. Explosion An explosion is caused inside a vessel when the pressure within the vessel exceeds the atmospheric pressure acting externally on its surface. This policy, however, does not cover destruction or damage caused to the boilers or other vessels where heat is generated. 4. Storm, cyclone, typhoon, hurricane, tornado, landslide

These are all various types of violent natural disturbances accompanied by thunder or strong winds or heavy rain fall. Loss or damage directly caused by these disturbances are covered excluding those resulting from earthquake, volcanic eruption etc.

5. Bush fire This covers damage caused by burning of bush and jungles but excluding destruction or damage caused by forest fire.

6. Riot, strike, malicious, and terrorism damages Any loss or physical damage to the property insured directly caused by such activity or by the action of any lawful authorities in suppressing such disturbance is covered.

7. Aircraft damage

Loss, destruction or damage caused by Aircraft, other aerial or space devices and articles dropped there from excluding those caused by pressure waves.

8. Overflowing of water tanks and pipes etc. Loss or damage to property by water or otherwise on account of bursting or accidental overflowing of water tanks, apparatus and pipes is covered.

Procedure of effecting Fire insurance: For obtaining fire insurance policy, a property holder must follow the following procedure. Selection of insurance Proposal form Evidence of respectively Survey of the property Acceptance of proposal Issue of cover note Issue of insurance policy/ bond

Selection of insurance:

First of all a policy holder must select the insurance company for fire insurance. The company having good financial position and ideal terms and condition against fire insurance and ideal terms and condition against fire insurance must be referred. Proposal form: After selecting of the company, a proposer must fill up the proposal form, which can be obtained free of cost from insurance company. It contains different question regarding the value, nature, time, construction of the property to be insured and answer of various question must be filled by insured and answer of various question must be filled by the proposer. The proposal form also include name, address, occupation of proposer together with insured amount, types of policy, method of paying premium, etc. All the details regarding property should be cleared and true. False matter should not be included. After filling the information in proposal form, the proposer should sign it. Evidence of respectively: It is a recommendation provided by an individual, institution, firm or a company about some person. In fire insurance there is much physical and moral hazards (risk). Physical hazards arise from the nature, design or site of insured property. And the moral hazard means the character of the proposer. Evidence of respectively is required for the fire insurance because sometimes a policy holder may destroy the property himself to claim on insurance company. In order to safe from these risks, insurance company collects evidence of honesty, integrity and financial position of the proposer

from the third party. If the insured amount is not very high or proposer is well known in the society then evidence of respectively is not required. Survey of the property: Generally insurance company issues the insurance policy on the basis of proposal from but sometimes the risk is high, the insurance company surveys the property and risk is determined. For survey of the property, insurance company can appoint the surveyor. Acceptance of proposal: After submitting of necessary document in the insurance company office, the officer scrutinize the documents and if the documents are recording to demand then the form is accepted and letter of acceptance with the rate of premium is sent to the proposer and first insurance premium will also be demanded by insurance company. Issue of cover note: When the proposer deposit the first premium then insurance company issue the cover note because the fire insurance process is very lengthy. Cover note is an interim protection note, work as an insurance policy and liability of the company will start from the date in which cover note is issued. Issue of insurance policy/ bond: At least insurance company will issue the insurance policy which is dully stamped and contains terms and conditions against fire insurance. It is legal and formal document of fire insurance.

Types of fire insurance policy: Insurance company issues different type of insurance policies to suit the client. These are different types of fire insurance policy, which are described as under. 1. Valued policy 2. Specific policy 3. Floating policy 4. Average policy 5. Excess loss policy 6. Declaration policy 7. Adjustable policy 8. Maximum value with discount policy 9. Re- instatement policy 10.Comprehensive policy 11.Consequential loss policy

Valued policy: Under this policy, insurance company determines the value of proposed property or subject matter at the time of insurance contract through

expert. In case of loss, compensation is given on the basis of pre-determined value of goods. In this policy, market price is not paid. It is useful for those policies, market price is not paid. It is useful for those goods, which valuation in difficult after destruction like jewelry, furniture, books, painting, artistic goods, documents, manuscripts, etc. Specific policy: In this policy, insurance company is liable to indemnify the loss at a specific amount, which is mentioned in the policy itself. If the loss occur with in the specific sum then, insurance company will be liable to pay specific sum but if the value of loss is more than the specific sum then, insurance company will not be liable pay more than the specific amount. Floating policy: When the goods of the business are kept in various warehouses and goods are taken out in and out off the warehouse then a floating policy is taken. This single policy covers the properties at the different places against loss by fire. At the time of fire, the estimated value of goods is calculated and losses are indemnified. This policy provides financial protection of goods at different places. Average policy: In a policy contain average clause then it is called average policy. Under this policy actual loss in not indemnify but it indemnify the loss on average basis. If the insured property totally damaged then insurance company pay 50% of the total insured amount of the insured property. This insurance is not fully beneficial to the insured property.

Excess loss policy: This policy is suitable for those businesses that have different stock of good and also goods fluctuate time to time. Under this policy, a business man has to take two policies. First loss policy and Excess loss policy The first loss policy covers the minimum value of stock which is always held by him and its premium is very and excess loss policy for the excess value of goods stored over the above the minimum stock during the specified period and its premium is very is very low. Declaration policy: Under this policy, an insured is required to declare maximum stock which he expects to have any time during the policy period. Under this contract, 1/4th of insured amount is paid at starting. An insured must have to inform the insurance company about increasing or decreasing the stock every month or every 15 days. Under this, insured amount is calculated n the basis of estimated value of maximum stock. Compensation is also paid up to this limit. This policy is also taken for maximum stock but premium is paid only for actual stock. Adjustable policy: Under this policy a policy holder can hold the property for a definite sum. But insured can change amount can change amount of premium as changing value of stock. The insured is required to give information about

his changing stock position every month to the insurance company. The premium is calculated in the basis of such information. Benefit of this policy is that, insured amount adjusted according to changing stock and the premium is also fixed on this basis. Maximum value with discount policy: Under this policy, no pre- declaration or adjustment is required but the policy is taken for the maximum amount of stock and full premium is paid there on at the end of the year. Under this policy insured amount and premium is fixed at the beginning and no changes is made whether stock is increasing or decreasing. Re- instatement policy: This policy is issued to void the conflict of indemnity. In this policy, insurance company does not indemnity the loss but it re-instates the insured property lost by fire. It is also called New for old policy because the old property is replaced in new property. It is issued for insuring building, equipment, factory, etc. If the insurance company to replace or repair the damaged property then it will compensate the damaged property on the basis of existing market price. Comprehensive policy: This policy undertakes full protection not only against risk of fire but combining with it. The risk of pest, lighting, flood, robbery, explosion, strike, earth quake, etc. This type of policy also has some limitation and will have to pay higher premium. This policy is also known as All - in All policy or All Risk Policy.

Consequential loss policy: This policy is issued to cover up the loss caused by fire or other consequtional happenings. So this policy become helpful in like payment of interest wages, salary, rent, etc. and also the loss of property due to stopping business. This policy indemnifies the financial loss of the insured. It compensates the both direct and indirect losses.

Claims Process for Fire Insurance

In the event of fire the insured must immediately give the insurer a notice about the loss caused by fire. A written claim should be delivered with in 15 days from the date of loss. The insured is required to furnish all plans, invoices, documents, proofs and other relevant informations required by the insurer. If the insured failed to submit these documents with in 6 months from the date of loss, the insurer has the right to consider it as no claim. On receipt of the claim the insurer verifies whether the essentials of a valid claim are satisfied or not. e.g. The cause of fire should be an insured peril. The insured completes the form, signs the declaration given in the form as to the truthfulness and accuracy of the information and returns the same. An official employed by the insurer investigates small and simple claims. For large claims, the insurance company employs independent loss surveyor. On the basis of the claim form and the investigation report, the company then settles the claim. *********

3) MOTOR VEHICLE INSURANCE

There has been a sudden rise in the motor accidents in the last few years. Much of these are attributable to increase in the number of vehicles. Every vehicle before being driven on roads has to be compulsorily insured. The motor insurance policy represents a combined coverage of the vehicles including accessories, loss or damage to his property or life and the third party coverage. Persons driving vehicles may cause losses and injuries to other persons. Every individual who owns a motor vehicle is also exposed to certain other risks. These include damage to his vehicle due to accidents, theft, fire, collision and natural disasters and also injuries to himself. In 1939, motor vehicle act came into force in India. Compulsory insurance was introduced by motor vehicle act to protect the pedestrians and other third parties. Claims for damages may arise due to possession of car, usage and maintenance of car. Motor insurance policy will pay the financial liability arising out of these risks to the insured person.

DEFINITION

Motor insurance policy is a contract between the insured and the insurer in which the insurer promises to indemnify the financial liability in event of loss to the insured.

Motor Vehicles Act in 1939 was passed to mainly safeguard the interests of pedestrians. According to the Act, a vehicle cannot be used in a public place without insuring the third part liability. According to Section 24 of Motor Vehicles Act, "No person shall use or allow any other person to use a motor

vehicle in a public place, unless the vehicle is covered by a policy of insurance."

Classification of Motor Vehicles

As per the Motor Vehicles Act for the purpose of insurance the vehicles are classified into three broad categories such as.

1. Private cars a) Private Cars - vehicles used only for social, domestic and pleasure purposes b) Private vehicles - Two wheeled 1. Motorcycle / Scooters 2. Auto cycles 3.Mechanically assisted pedal cycles

2) Commercial vehicles 1) Goods carrying vehicles 2) Passengers carrying vehicles 3) Miscellaneous & Special types of vehicles

The risks under motor insurance are of two types: 1) Legal liability due to bodily injury, death or damage caused to the property of others. 2) Loss or damage to one's own vehicle\ injury to or death of self and other occupants of the vehicle.

BASIC PRINCIPLES OF MOTOR INSURANCE

Motor insurance being a contract like any other contract has to fulfill the requirements of a valid contract as laid down in the Indian Contract Act 1872. In addition it has certain special features common to other insurance contracts. They are: Utmost good faith Insurable interest Indemnity Subrogation and contribution Proximate cause

Utmost good faith The principle of Utmost good faith casts an obligation on the insured to disclose all the material tracts. These material facts must be disclosed to the insurer at the time of entering into the contract. All the information given in the proposal form should be true and complete.e.g. the driving history, physical health of the driver, type of vehicle etc. If any of the mentioned material facts declared by the insured in the proposal form are found inappropriate by the insurer at the time of claim it may result in the claim being repudiated.

Insurable Interest In a valid insurance contract it is necessary on the part of the insured to have an insurable interest in the subject matter of insurance. The presence of insurable interest in the subject matter of insurance gives the person the right to insure. The interest should be pecuniary and must be present at inception and throughout the

term of the policy. Thus the insured must be either benefited by the safety of the property or must suffer a loss on account of damage to it.

Indemnity Insurance contracts are contracts of indemnity. Indemnity means making good of the loss by reimbursing the exact monetary loss. It aims at keeping the insured in the same position he was before the loss occurred and thus prevent him from making profit from insurance policy.

Subrogation and Contribution Subrogation refers to transfer of insured's right of action against a third party who caused the loss to the insurer. Thus, the insurer who pays the loss can take up the assured's place and sue the party that caused the loss in order to minimise his loss for which he has already indemnified the assured. Subrogation comes in the picture only in case of damage or loss due to a third party. The insurer derives this right only after the payment of damages to the insured. Contribution ensures that the indemnity provided is proportionately borne by other insurers in case of double insurance.

TYPES OF MOTOR INSURANCE POLICIES The All India Motor Tariff governs motor insurance business in India. According to the Tariff all classes of vehicles can use two types of policy forms. They are form A and form B. Form A which is known as Act Policy is a compulsory requirement of the motor vehicle act. Use without such insurance is a penal offence. Form B which is also known as Comprehensive Policy is an optional

cover.

1. Liability only policy - This covers third party liability and / or death and property damage. Compulsory personal accident covers for the owner in respect of owner driven vehicles is also included.

2. Package policy - This covers loss or damage to the vehicle insured in addition to 1 above.

3. Comprehensive policy- Apart from the above-mentioned coverage, it is permissible to cover private cars against the risk of fine and / or theft and third party/ theft risks.

Every owner of motor vehicle has to take out a policy covering third party risks but insurance against other two risks is optional. When insurance policy covers third party risks, third party who has suffered any damages, can sue the Insurance company even though he was not a party to the contract of insurance.

Insurance policies for the vehicles subject to the purchase agreements, lease agreements and hypothecation are to be issued in the joint names of the hirer and owner, lease and lessor, owner and pledge respectively. In case of policy renewal a notice of one month in advance before the date of expiry is issued by the insurers. The notice gives the details of premium payable for renewal.

Transfer of ownership In case of any sale of vehicle involving transfer of policy, the insured should apply to the insurer for consent to such transfer. The transfer is allowed, if within

15 days of receipt of application, the insurer does not reject the plea. The transferee shall apply within fourteen days from the date of transfer in writing to the insurer who has insured the vehicle, with the details of the registration of the vehicle, the date of transfer of the vehicle, the previous owner of the vehicle and the number and date of the insurance policy so that the insurer may make the necessary changes in his record and issue fresh Certificate of Insurance.

Insurer's Duty to Third Party It is obligatory on the part of the insurer to pay the third party since, the insurer has no rights to avoid or reject the payment of liability to a third party. The duties of the insurer towards a third party are provided in section 96(1). The court determines the third party liability and accordingly compensation is paid. The liability is unlimited.

Cancellation of Insurance The insurer may cancel a policy by sending to the insured seven days notice of cancellation by recorded delivery to the insured's last known address and the insurer will refund to the insured the pro-rata premium for the balance period of the policy. A policy may be cancelled at the option of the insured with seven days notice of cancellation and the insurer will be entitled to retain premium on short period scale of rates for the period for which the cover has been in existence prior to the cancellation of the policy. The balance premium, if any, will be refundable to the insured.

Double Insurance When two policies are in existence on the same vehicle with identical cover, one of the policies many be cancelled. Where one of the policies commences at a

date later than the other policy, the policy commencing later is to be cancelled by the insurer concerned. If a vehicle is insured at any time with two different offices of the same insurer, 100% refund of premium of one policy may be allowed by canceling the later of the two policies. However, if the two policies are issued by two different insurers, the policy commencing later is to be cancelled by the insurer concerned and pro-rata refund of premium thereon is to be allowed.

Calculation of Premiums In the case of Comprehensive Insurance Cover, for the purpose of premium, vehicles are categorized as follows:

Private Car This is used for personal purposes. Private cars are lesser exposed than taxis, as the latter is used extensively for maximum revenue. The premium is computed on the following basis

1. Geographical area of use Large cities have higher average claim costs followed by suburban areas, smaller cities, and small towns or rural areas. In India, the geographical areas have been classified into Group A and Group B. 2. Cubic capacity The more the cubic capacity, the higher the premium rate. 3. Value of the vehicle. The premium rate is applied on the value of the vehicle. Owner has to declare the correct value of the vehicle to the insurer. This value is known as the Insured's Estimated Value (IEV) in motor insurance and represents the sum insured.

Two-wheeler It is used for personal purpose only. Premium is calculated on cubic capacity and value of vehicle. Theft of accessories is not covered, unless the vehicle is stolen at the same time.

Commercial Vehicle This is the vehicle used for hire. For goods carrying commercial vehicle, premium is calculated on the basis of carrying capacity i.e. gross vehicle weight and value of the vehicle. For passenger carrying commercial vehicles, premium is calculated on the basis of again carrying capacity i.e. number of passengers and value of the vehicle. Accessories extra, as specified. Heavier vehicles are more exposed to accidents since the resultant damages they incur are more. Similarly, vehicles with higher carrying capacity expose more passengers to risk. Therefore heavier vehicles attract higher premium rate.

CLAIM SETTELEMENT

Claim arise when 1) The insured's vehicle is damaged or any loss incurred. 2) Any legal liability is incurred for death of or bodily injury 3) Or damage to the third party's property.

The claim settlement in India is done by opting for any of the following by the

Insurance company o Replacement or reinstatement of vehicle o Payment of repair charges

In case, the motor vehicle is damaged due to accident it can be repaired and brought back to working condition. If the repair is beyond repair then the insured can claim for total loss or for a new vehicle. It is based on the market value of the vehicle at the time of loss.

Motor insurance claims are settled in three stages. In the first stage the insured will inform the insurer about loss. The loss is registered in claim register. In the second stage, the automobile surveyor will assess the causes of loss and extent of loss. He will submit the claim report showing the cost of repairs and replacement charges etc. In the third stage, the claim is examined based on the report submitted by the surveyor and his recommendations. The insurance company may then authorize the repairs. After the vehicle is repaired, insurance company pays the charges directly to the repairer or to the insured if he had paid the repair charges.

Section 110 of Motor Vehicle Act, 1939 empowers the State Government in establishing motor claim tribunals. These tribunals will help in settling the third party claims for the minimum amount

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4) RURAL INSURANCE
Rural insurance is an imperative in India. IRDA regulations have made compulsory rural insurance as a minimum percentage of total business mobilized. Rural insurance covers include a wide variety of agricultural insurance covers, low cost live and health insurances, equipment insurances. Social insurance through various programs provides a safety net against the financial insecurity that can result from premature death, unemployment, poor health, job related disabilities and old age. These programs are especially vulnerable to individuals and families with limited incomes. However in India Social Insurance concept is in its premature stage, due to vast cultural, economic, social diversities. GIC is pioneer in social insurance. GIC has launched certain social insurance covers like Krishi Bima Yojna, Personal Accident social security scheme, Hut insurance scheme. IRDA regulations have made social insurance as a minimum percentage of total business mobilized.

Need and Potential of Rural Insurance: The insurance sector has been mostly confined to cities. However, in the rural areas where human life and income generating rural assets need more protection, there is tremendous scope for developing insurance business. The rural sector so far has been grossly neglected since last 50 years from the privileges of insurance cover, though a silent economic revolution can be seen now in the villages. With the opening of the insurance sector to the private sector and foreign companies, the time has come when the government should pay serious attention to covering the rural areas. While it is true that access to insurance cover depends on the literacy/awareness levels and assured income, well planned and organized

efforts by committed private sector companies can yield rich dividends from the rural areas. This is because: 1. A large number of rural districts have witnessed significant growth and prosperity; 2. Access to reliable and authentic data and information has improved considerably, which can enable quick and correct decision making; 3. There are specific functionaries and agencies in the rural areas, which can help explore and exploit insurance business in the untapped rural market.

Rural Banking as Catalyst With a decline in the public investment in agriculture, the rural banking system has been encouraging the farm development through provision of credit facilities for production of crops including horticulture, plantation, forestry; purchase of farm equipment; livestock and fish farming; irrigation facilities and installation of diesel engines etc. Bank credit is also provided for establishing village/cottage industries, stocking/supplying farm inputs and cattle feed, and business and trade purposes. From 1969 70 to 1999 2000, up to Rs. 3.1 crore has been provided to the farm sector. With enhanced incomes, and further supplemented by bank credit, the rural population is acquiring consumer durables, constructing houses, purchasing vehicles, computers and so on. All these assets need to be protected from damage/loss, natural or man made. Thus, the rural areas offer enormous opportunities for committed private insurance companies in both life and non life insurance schemes. The efforts by the private insurance players, of course, backed by business, can have direct positive impact on rural development and the economic growth.

Insurance in the farm sector can supplement the advances of science and technology. Both the conventional players, LIC and GIC have been providing some insurance cover in rural areas. But, they are insufficient to meet the exact requirements of the rural areas. There is an immense need of creating awareness among people. The rural customers often contend that the claim lodgment and settlement procedure is time - consuming and cumbersome. Cattle insurance under the government sponsored integrated Rural Development Programme and Crop insurance have not met with the expected results. Besides, the village profile available with each of the branches of nationalized/public sector banks contain exhaustive data on the population, cultivating households, categories of farmers, classification of workers, livestock, cropping pattern, farm equipment and machinery and so on. There are more than 1,75,000 rural credit outlets in addition to the offices of the District Rural Development Agency, the District Industries Centre, and the District Development Manager of nationalized banks and Lead District Manager of the lead bank. All these institutions and agencies can offer considerable information to insurance companies.

Legal Framewok The (IRDA) Insurance Regulatory and Development Authority Act, 1999 (para 19; first schedule) has amended the Section 32B and 32C of the Insurance Act, 1938 as under : Section 32B Every insurer shall, after the commencement of Insurance Regulatory and Development Authority Act, 1999, undertakes such percentages of life insurance

business and general insurance business in the rural and social sector, as may be specified, in the Official Gazette by the authority, in this behalf. Section 32C Every insurer shall, after the commencement of Insurance Regulatory and Development Authority Act, 1999, discharge the obligations specified under Section 32B to provide life insurance or general insurance policies to those residing in the rural sector, workers in the unorganized sector of informal sector or economically vulnerable or backward classes of the society and other categories of persons as may be specified by the regulations made by the authority and such insurance policies shall include insurance for crops. The IRDA Regulations 2000 makes it compulsory for the insurers, existing and new to promote the rural insurance. The regulations prescribe for undertaking benchmark percentages for insurances in the rural insurance sector for the players. The rural sector has been defined as a place which, as per the latest census, the population is not more than 5,000 the density of population is not more than 400 per sq. k.m. and at least 75% of the male working population is engaged in agriculture. The regulations provide that those who are proposing to carry on the life insurance business in the year 2000 or later, are required by these regulations to write in the rural sector, at least 5% of the total policies written directly in the first financial year, 7% in the second financial year and so on. In case of non life insurance, 2% of the total gross premium income written direct in that year, 3% in the second year and so on. Also, the authority may revise the obligation once in 5 years.

VARIOUS RURAL INSURANCE POLICIES :

1) AQUA CULTURE INSURANCE Suitability: This policy is suitable for licensed farms provided in accordance with the Government Notification for growing brackish water shrimp/fresh water prawns by adopting extensive/modified extensive/ semi intensive systems.

Salient features: The Policy grants cover under two sections: Section I : Basic cover, which covers only losses due to natural calamities. Section II : Comprehensive cover granting cover for disease also. Policy is usually given for a period of 41/2 months. The basic cover provides compensation for total loss of shrimp/prawns due to : Summer Kill, pollution from external source, poisoning riot, strike and malicious acts of third parties, terrorism, explosion/implosion, aircraft dropped there from, impact damage, earthquake, storm, tempest, cyclone, flood and inundation, volcanic eruption and other convulsions of nature. Comprehensive cover in addition to basic cover encompasses death due to diseases except those caused by bad management and nutritional deficiencies.

2) CATTLE INSURANCE Suitability: This policy is suitable for the farmer who owns the cattle and the banks and financial institutions which have financed the purchase of cattle under IDP/DRDA/DPAP schemes.

Salient features: Cattle refers to Cows and Buffaloes, Stud Bulls, Bullocks, He Buffaloes, Calves and Heifers. The policy is usually given for a period of 12 months or for a long term of 3 to 5 years as per term of loan. The policy covers loss due to death, accident, illness or disease of the animal. A qualified veterinary officers certificate is necessary for accepting the proposal and also for fixing the value of the cattle which forms the basis of loss settlement. The policy also covers transit of cattle from the place of purchase to stable located within 80 km. For transit above the stipulated distance, additional premium @ 1% is charged. Benefits : The policy pays for the market value of the animal prior to the accident or the sum insured whichever is less. A veterinary surgeons certificate will be necessary to claim the amount in the case of death of the cattle.

3) FAILED WELL INSURANCE Suitability: Wells financed by co-operative societies, financial institutions, banks, Government sponsored schemes can be covered under this policy against the risk of low or no yield provided the selection of site is made on scientific principles and methods. Salient features: The well sites located in areas mapped by state geological departments having potential for borewells for yields upto 1000 gallons per hour are covered by this policy. Yield will be tested by pumping intermittently for 6 hours by a 2HP/3HP submersible pump. If the yield is below 500 gallons, the well shall be deemed to be a total failure.

If the yield is between 500 to 1000 GPH, policy pays for the proportion the actual yields bears to assured yield. Following types of wells are covered under this policy :

- cum-borewells Benefits : Drilling cost at Rs. 160per metre upto a depth of 80-90 meters is payable subject to a limit of Rs. 15,000 per borewell. 4) FARMERS PACKAGE INSURANCE Suitability: This policy is suitable for the farmers who wish to cover all their property and assets under a single package policy. The policy can be issued either to individual farmers or a group. Salient features: Personal effects, household goods, village/cottage industrial units belonging to the farmers are covered under this insurance. The policy has 14 sections offering coverage as follows : Section 1 : Covers the residential building of the farmer including contents and farm produce kept in the building from fire and allied perils. Section 2 : Covers the loss or damage to stock or farm produce from fire and allied perils. Stocks in godown and in open are covered.

Section 3 : Covers all the contents in the premises against burglary, housebreaking and terrorist acts. Section 4 : Covers loss or damage to TV/VCP/VCR of the insured due to fire/burglary/theft, electrical or mechanical breakdown of accidental external means. Section 5 : The policy covers loss or damage to pedal cycle by accident, burglary, housebreaking, or fire. Section 6 : Covers the insured and his family against personal accident and death due to accidental reasons. Section 7 : Provides fire cover to artisans, tiny sector units, village and cottage industries. Section 8 : Cover death of animals due to diseases or accident including fire/lightning/famine. Section 9 : Covers agricultural pumpset upto 10 HP capacity from the risks of fire/theft/burglary and breakdown risks. Section 10 : Covers over 500 poultry birds in the farm located within the insured premises due to any accident. Section 11 : covers fraud committed by any salaried employee of the insured in the premises. Section 12 : Covers accompanied baggage lost or damaged during travel anywhere in India. Section 13 : Covers animal drawn vehicle from risks of damage to the vehicle, personal accident, third party liability from accidental causes. The policy also covers the life of the driver. Section 14 : Covers loss or damage to agricultural tractors and its accessories due to accidental reasons. Unnamed passengers (upto 6) travelling on such tractors are covered.

Benefits: Policy offers compensation as per limits of liability/as per sum insured set against each section. Premium : Rates of premium are fixed for individuals sections. If more than 4 sections are covered, upto 15% discount is available. When more than 6 sections are covered, upto 20 % discount is allowed.

5) FISH INSURANCE Suitability: This policy is devised for fresh water fish rearers to cover stock of fry/fingerlings/fish/breeders or breeds like Rohu, Katla, Mrigal, Common Carp, Silver Carp or any other recognized breeds. Salient features: The policy covers total loss to the fish due to accident or disease during the period of insurance. The cover includes loss due to pollution, poisoning, malicious act by third parties, riot and strike. Partial loss of any kind is not covered. Flood and allied risks are covered as an extension on payment of extra premium. The policy can also be extended to cover the fish rearing pond, bunds, sluices etc. against fire and natural calamities on payment of additional premium. Policy is issued for the rearing period subject to a maximum period of 12 months from the date of stocking. Benefits: Since the value of fish increases due to growth and inputs, settlement of any loss will be effected as per the scheduled valuation fixed on fortnightly basis (the table of valuation will be attached to the policy). The value depends on the cost of fry/fingerlings, cost of input and other incidental expenses.

6) FLORICULTURE INSURANCE Suitability: Growers of commercial flowering plants such as rose, chrysanthemum and jasmine having adequate agricultural expertise in the subject may take out this policy. Salient features: This policy covers only plant whilst growing in the farm/green house/polyhouse against total loss or damage due to :

lood and inundation

Additional Covers: Policy may be extended to cover the risks of loss due to drought, pests, and diseases specific to flowering plants. Benefits: The policy covers the input costs incurred till the time of loss. These are the recurring expenses incurred to raise/maintain the plants such as soil preparation, fertilizer, manure, cost of plants/seeds/saplings, cost of planting/sowing and pruning, pesticides, insecticides, irrigation, labour charges and other costs specifically covered. Claims exceeding 50% of the total sum insured per hectare or Rs. 1,000/- whichever is less only shall be admitted. Each and every claim is subject to an excess of 20%.

7) LIFT IRRIGATION/SPRINKLER INSURANCE Suitability: This policy is suitable for the agriculturist using the lift irrigation or sprinkler installation for cultivation. Salient features: This policy covers loss or damage to intake well, delivery chambers, jackwell, pump-house, water storage tank, pipelines, cables, starters and motors of the lift irrigation system or sprinkler installation arising out of : Fire and allied perils

ne

Benefits: On the occurrence of a loss, claims will be paid for the cost of restoration to the extent of sum insured set against each item. An excess of 1% the machinery value subject to a minimum of Rs. 1000/- per claim is applicable. Theft claims are paid on receipt of non-traceable certificate from the police.

8) PLANTATION/HORTICULTURE INSURANCE Suitability: This policy is suitable for individual farmer-owner or tenant engaged in cultivation of horticultural trees or plantations or an association/organized and registered body of farmers engaged in cultivation of specified crops. Also bodies producing inputs, processing/marketing of the produce can take this policy.

Salient features: Horticultural trees/orchards such as citrus fruits (Orange, Lime, Sweet Lime), Grapes, Chikoo, Pomegranate, Banana and Plantations such as Rubber, Eucalyptus, Poplar, Sugarcane, Betevline, Cardamom, Sweet Chilli, Oil Palm, Teakwood, Strawberry, Tea, Apple and Coconut can be covered by this policy. The policy covers loss or damage due to fire (including forest and brush fire), lightning, storm, hailstorm, cyclone and other such natural calamities/acts of terrorist to fruits in respect of horticultural crops. Tree in Case of Plantations Additional covers : Unseasonal rains and frost in case of grapevines and tea, loss or damage by wild animals in case of sugarcane, banana; drought and disease in case of banana, flood and inundation in case of teak plantations; disease and pests in case of tea plantations and betelvine are the additional covers available. Benefits : Claims are paid to the extent of 80% of the assessed loss subject to the overall limit of the sum insured. Sum insured shall be based on the cost of cultivation, i.e., input cost or cost of raising/development of trees. Only such claims exceeding 10% of sum insured per acre or minimum of Rs. 1000/- shall be admitted. Input costs on account of loss or damage to the horticultural crop/plantations are covered. Loss of yield is not covered.

9) POULTRY INSURANCE Suitability: This policy is suitable for the poultry farmers, the beneficiaries of schemes sponsored by DRDA, DPAP, IRDP and financial institutions providing assistance to poultry units. Salient features:

This comprehensive policy is issued to cover poultry consisting of broiler chicks/Layer chickens/cocks and hens in the poultry farms. A minimum number of 100 broilers/500 layers or 200 birds per batch in the hatchery can be covered under this policy. The policy provides compensation for loss to birds dead due to accident (including fire, lightning, flood, cyclone, earthquake, riot, strike, and terrorist act); diseases contracted or occurring during the period of insurance.

10) CATTLE INSURANCE Cattle insurance covers indigenous cross-bred and exotic cattle owned by private owners and financial institutions, i.e., Bank financed, Military dairy farms, Co-op Dairies, Corporate dairies. The cover extends to death of cattle due to accident inclusive of flood, cyclone, famine or any other fortuitous circumstances, diseases, surgical operations, riot and strike, terrorism, earthquake. In case of transit beyond specified distance by Road or by Rail, additional premium has to be paid by the insured. The cover excludes losses due to malicious act, accident/diseases contracted prior to commencement of risk, transit by air or sea, intentional slaughter, theft or clandestine sales, missing of insured animals, war and allied perils, nuclear exclusion clause. 11) RASHTRIYA KRISHI BIMA YOJNA RKBY The objectives of the NAIS are : 1. To provide insurance coverage and financial support to the farmers on the event of failure of any of the notified crop as a result of natural calamities, pests and diseases. 2. To encourage the farmers to adopt progressive farming practices, high value inputs and higher technology in Agriculture.

3. To help stabilize farm incomes, particularly in disaster years.

12) Livestock Insurance Scheme The Livestock Insurance Scheme has been formulated with the twin objectives of providing protection mechanism to the farmers and cattle rearers against any eventual loss of their animals due to death and to demonstrate the benefit of the insurance of livestock to the people and popularize it with th

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5) SOCIAL INSURANCE
The government on a compulsory basis generally provides social insurance. It is not easy to precisely define because the government can use the power and resources to apply the insurance method or modification of it in a variety of ways. In the developed countries like US, there has been a tendency to look first to the private insurance industry for the coverage of risk that society deem important. When such risks have not been handled adequately by private insurance, social insurance programme comes into picture. Characteristics and Need for Social Insurance The main characteristics of social insurance are : Social insurance is based on the law, rather than on contract. Cost and benefit are established by and can be changed by government. Hence, coverage is compulsory for all persons to whom the law applies. They cannot choose to decline to participate, nor can they select the coverage or the amount of the benefits. The objective is to provide some minimum level of economic security for the large portion of the population. The basic ideology is to provide an economic system that stresses free enterprise and individual initiative, people should not rely entirely upon government programs. The focus of social insurance is to provide maximum benefits to the lower income groups. Unless lower income groups are subsidized to high income groups, the payments of the former will no be large enough to furnish the minimum level of protection that are desired.

 Social insurance usually covers only those who have been employed. Most social insurance plans are concerned for interruption of income (by death, unemployment or retirement) earned through employment.

Legal Framework for Social Insurance The Insurance Regulatory and Development Authority Act, 1999 ( para 19 ; First schedule )has amended the Section 32B and 32C of the Insurance Act, 1938 as under : Section 32B Every insurer shall, after the commencement of Insurance Regulatory and Development Authority Act, 1999, undertake such percentages of life insurance business and general insurance business in the rural and social sector, as may be specified, in the Official Gazette by the authority, in this behalf. Section 32C Every insurer shall, after the commencement of insurance Regulatory and Development Authority Act, 1999, discharge the obligations specified under section 32B to provide life insurance or general insurance policies to those residing in the rural sector, workers in the organized sector or informal sector or economically vulnerable or backward classes of the society and other categories of persons as may be specified by the regulations made by the authority and such insurance policies shall include insurance for crops. The IRDA Regulations 2000 makes it compulsory for the insurers, existing and new to promote the social insurance. Similar to the requirement for the rural sector, the regulations also prescribe for undertaking benchmark percentages for insurances in the social insurance sector for the players.

The social sector is defined as including the unorganized sector, the informal sector, the economically vulnerable or backward classes and other categories of persons, both in rural and urban areas. In case of social sector the requirement is compulsory underwriting of 5000 lives in the first financial year 7,500 in the second year and so on. Also, the authority may revise the obligation once in 5 years. Social Insurance in India Social Insurance is the baby of the social security systems prevailing in that country. Social security is the security cover which society furnishes through organization against risks to which its members are exposed. The basic idea is to use social means to prevent deprivation and vulnerability to deprivation. In the literate on development issues. It has often been assumed explicitly or implicitly that developing in the countries are too poor to be able to afford social security systems. Public participation in social security systems can take wide variety of forms and it is very much possible even for poor countries to archive considerable success on this front. This not to say that economic growth and social security are not linked. However at the same time, simple economic growth alone cannot ensure improvements in living standards of people. Social intervention is necessary for improving quality of life at the micro level. Studies carried out by UNICEF and World Bank also provide considerable evidence that it has been the direct public support rather than the average income of the population that has been the driving force behind the success of social security schemes worldwide. In fact, the countries with good primary social security systems are those which have adopted the path of support led security (as against growth led security) and have not waited to grow rich before resorting to large - scale public support to guarantee certain basic capabilities. Notable examples include China, Chile, Cuba, Jamaica and Kuwait.

Need for social security system in India A large chunk of Indian population lives under abject poverty. The barely manage to earn enough to eat. It is our social obligation our underprivileged brethren with an adequate safety cover. Only a very small percentage of the working population is employed by the organized sector, which provides benefits like the state pension. A vast majority is either self-employed or employed in the rural organized sector. As a result, they are deprived of social benefits such as retirement benefits and disability or death compensation. Similarly, health care although subsidized is thinly and haphazardly spread. State support for the unemployed and disabled is negligible. Social changes taking place in the country are also resulting into increased need for a social security system. The Joint Family System, which prevailed in India for long is losing its flavor. This system provided a natural safety cover to the members of a family. However, its break-up into nuclear families means that the death or disability of the bread-earner leaves his dependants completely exposed. A comprehensive social security system includes social insurance, health insurance, disability compensation, unemployment compensation, old age pension schemes, etc. In India, social security systems are an emerging concept and there is no strong base to start with. Given the constraints on funds and infrastructure availability, social insurance is the only scheme that can be launched at present. Further, opening up of the insurance sector has created increased awareness about insurance and also provides a sustainable revenue model to carry out the task of social insurance. Social Insurance Scheme of GIC GIC has launched certain social insurance covers like Krishi Bima Yojna, Personal Accident social security scheme, hut insurance scheme. However, the experience

has been that most of these are failure in the sense these schemes failed to archive the objectives for which these were floated. Similar is the case of LIC. Social Insurance Scheme of LIC Life Insurance Corporation of India (LIC) has taken the initiative and launched several social insurance schemes. Some of the schemes launched by LIC in the past are : Landless Agricultural Laborers Scheme, Group Insurance Scheme for beneficiaries of the Integrated Rural Development Program, Rural Group Life Insurance Schemes and the Krishi Shramik Samajik Suraksha Yojna (2001). Most of the social insurance schemes launched could not achieve their desired objective as a large chunk of the population covered under these schemes were not even aware of them. In August 2000, LIC launched the Janashree Bima Yojana as a single scheme to replace the older social insurance schemes. The objective of this scheme is to provide life insurance protection to the rural and urban poor living below the poverty line and marginally above the poverty line. This is a group insurance scheme and the minimum size of the group is 25. The annual premium is Rs.200 per member per annum. The member/nodal agency/state government pays half the premium and the remaining half is borne out of the Social Security Fund. There are 40 occupational groups, which can be covered under Janashree Bima Yojana. They range from beedi workers and handloom tailors to construction workers and safai karamcharis. Unemployment Insurance Unemployment Insurance is designed to provide short term protection for regularly employed persons who lose their jobs and who are willing and able to work. Unemployment insurance has several basic objectives : Provide cash income during involuntary unemployment Help unemployed workers find jobs

 Encourage employers to stabilize employment Help stabilize economy Unemployment insurance is a popular concept in developed countries like US where they have well-defined laws and regulations. However, in India it will take a long time to come.

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6) MISCELLANEOUS INSURANCE
The insurance industry is developing rapidly, not only in the scope of activities covered but also by the various new insurance covers that are being introduced. One area that saw rapid growth in a short span is miscellaneous insurance, also called accident insurance in England and casualty insurance in USA. According to Section 2(13B) Indian Insurance Act, 1938 Miscellaneous Insurance Business is the business of effecting contracts of insurance which is not principally or wholly of any kind or kinds included in Fire, Life and Marine Insurance business. The risks covered by miscellaneous insurance are classified into four main categories concerning Person Property Pecuniary risks, and Liabilities. The first category includes insurance for individuals and groups against health risks such as accidents and hospitalization & critical illness. Property risks relate to burglary, housebreaking, etc., and include other classes like livestock, plate, glass, money in transit and others. Pecuniary risks refer to fidelity and other credit or financial guarantees Liability insurance includes personal liability insurance, commercial general liability, professional indemnity, product liability and other similar policies.

In addition to life, fire and marine Insurance, several other general types of insurances are available today. The nationalized general insurance companies have also been offering special schemes meant for rural areas such as crop

insurance, cattle insurance, insurance for huts, poultry etc. There is also a social security group accident scheme covering weaker sections of the society. Some of these are described below:

PERSONAL ACCIDENT INSURANCE.

All of us are exposed to the risk of accident, which is a threat to our financial security, and therefore it is prudent to have adequate personal accident cover to manage this contingency. For handling accident risks, personal accident policy, Janata personal accident policy and Gramin personal accident policies are available in India. Scope of cover Personal accident policy pays compensation to the insured in the event of

happening of one or more of the following listed below which may be selected by insured at the time of taking policy: On death On permanent total and partial disability and On temporary total disability In case of accident death during the policy period, the policy in addition covers funeral expenses of the insured person. Permanent total disablement occurs when an individual is unable to perform his regular duties for the remaining part of his life. Permanent partial disablement may result when a person loses any part of his body due to accident. When an individual is injured in an accident and as a result he is unable to perform his normal duties for a certain period we can describe it as temporary total disablement. This policy can also be extended to reimburse the medical expenses due to accidents up to 10% of the insured amount or 25% of the claim amount or

expenses incurred for treatment of the insured person whichever is less. Personal accident policy does not cover the injuries resulting out of war, self-inflicted injury, diseases or insanity, death due to war operations, attempted suicides, accident in armed forces, aircraft accidents, accidents due to nuclear weapons etc. Janata personal accident policy is meant for weaker section of the society. Thus premium charged under this policy is comparatively less. Gramin personal accident policy is designed for the rural people in the country. It is a contract of Insurance under which the insurer agrees to pay a specific sum of money to the insured in case of bodily injury by accident and to the heirs of the insured in case of death by accident. A contract of personal accident insurance is not a contract of indemnity and the insurer has to pay a fixed sum of money on the death or total disablement of the insured or provide medical benefits for recovery from the injury. In case of accidental death during the policy period, the policy in addition covers funeral expenses of the insured person. Permanent total disablement occurs when an individual is unable to perform his regular duties for the remaining part of his life. Permanent partial disablement may result when a person loses any part of his body due to accident. It does not cover the injuries resulting out of war, diseases, attempted suicides etc. FIDELITY INSURANCE Under this type of insurance contract the insurer undertakes to compensate the insured against the loss caused by misappropriation of funds or goods or damage to the property caused by his employees. Such a policy is useful to the employers who fear embezzlement, forgery, fraud and dishonesty on the part of their employees. Under it the insured is required to furnish all material facts about the employees

and also to notify any change in the condition of their service. The policy can be taken for specific positions rather than names, e.g., accountant, cashier etc. Blanket cover is also available for entire staff or group of employees.

BURGLARY INSURANCE
Such a policy provides protection against loss or damage caused by housebreaking, robbery or theft. It is also known as 'robbery, theft or larceny insurance'. For this purpose a comprehensive policy may be taken or each risk may be separately insured. Full details of the article insured are given in the policy. Insured items include gold and gold ornaments and other assets including household items such as TV, fridge, air conditioner etc. A burglary policy for business premises would provide cover against loss to damage by house breaking and burglary of stock-in -trade, goods- in-transit, cash-in-safe, fixture and fittings etc. CREDIT INSURANCE Credit insurance policy is taken to cover the loss which may arise due to bad debts or non-payment of dues by the debtors. This insurance is very useful to businessmen who sell goods on credit. It protects them from loss arising out of insolvency of their debtors. In India, Export Credit and Guarantee Corporation (ECGC) provide credit insurance to exporters.

WORKMEN'S COMPENSATION INSURANCE In India, Workmen's Compensation Act was passed in 1934 and 1946. According to this act, an employer is required to pay compensation to his workers who receive injuries or contract occupational diseases during the course of their work.

An employer may obtain an insurance policy to cover such liability. The premiums are payable usually on the basis of wages. It is also known as 'Employers Liability Insurance'. This policy is essential to every employer who employs 'workmen' as defined under the Workmen's Compensation Act in order to protect himself against the legal liabilities arising out of death or bodily injury to this workman. It also extends coverage through reimbursement of medical, surgical and hospitalization expenses including transportation costs on the payment of additional premium. The National Insurance Company Ltd, United India Insurance Company Ltd, Oriental Insurance Company Ltd, and The New India Assurance Company Ltd offer workmen's compensation policies.

TRAVEL INSURANCE
Travel insurance covers travel related accidents also. While traveling outside India, individuals face risks such as loss of baggage, accidents involving injuries, illnesses and medical emergencies requiring hospitalization treatment. All this can pose serious consequences to the overseas travellers. A rational person should therefore secure the required coverage before leaving his home country. In India travel insurance has become popular among international travelers. WEDDING INSURANCE These days, weddings have become quite an expensive and elaborate affair. People do take care to make this once-in-a-lifetime event a memorable one. In case of any postponement or cancellation, there is a certain risk of monetary loss. The wedding insurance package can compensate for the monetary loss. This unique product covers the specific risks related to weddings. This Policy can protect you

against certain types of financial losses you may incur in the event of unpredictable situations during the period leading up to and including your wedding day. The period of insurance will be 24 hours prior to the start of the customary functions or rituals or programmes of events mentioned in the printed invitations till the end of the function or five days from the beginning whichever occurs earlier. This policy provides cover for expenses actually and already incurred or advances paid in connection with marriage hall, catering, pandit, guests, music parties, photos and videography, loss on cancellation of travel tickets etc. Liability is restricted only when such cancellation arises out of cancellation or postponement of marriage. The policy does not cover any loss arises when marriage is cancelled or postponed, because of dispute between marriage parties, willful negligence and criminal misconduct of the bride, bridegroom or their parents. EMPLOYEE STATE INSURANCE SCHEME The Employee State Insurance Scheme (ESIS) is an insurance system which provides both the cash and medical benefits. It is managed by the Employee State Insurance Corporation (ESIC), a wholly government-owned enterprise. It was conceived as a compulsory social security benefit for workers in the formal sector. The original legislation creating the scheme allowed it to cover only factories which has been using power and employing 10 or more workers. However, since 1989 the scheme has been expanded, and it now includes all such factories which are not using power and employing 20 or more persons. Mines and plantations are explicitly excluded from coverage under the ESIS Act.

UNEMPLOYMENT INSURANCE

Unemployment insurance is designed to provide short term protection for regularly employed persons who lose their jobs and who are willing and able to work. Unemployment insurance has several basic objectives: 1) Provide cash income during involuntary unemployment. 2) Help unemployed workers find jobs. 3) Encourage employees to stabilize employment. 4) Help stabilize economy. Unemployment insurance is a popular concept in developed countries like U.S. where they have well defined laws and regulations. However in India it will take a long time to come.

AVIATION INSURANCE
Aviation Insurance protects aircraft hulls and spares, and associated liability risks, such as passenger and third-party liability. Airports may also appear under this subcategory, including air traffic control and re-fuelling operations for international airports through to smaller domestic exposures.

BOILER INSURANCE
Boiler Insurance (also known as boiler and machinery insurance, or equipment breakdown insurance) insures against accidental physical damage to boilers, equipment or machinery.

BUILDERS RISK INSURANCE

Builders Risk Insurance insures against the risk of physical loss or damage to property during construction. Builder's risk insurance is typically written on an "all risk" basis covering damage arising from any cause (including the negligence of

the insured) not otherwise expressly excluded. Builder's risk insurance is coverage that protects a person's or organization's insurable interest in materials, fixtures and/or equipment being used in the construction or renovation of a building or structure should those items sustain physical loss or damage from an insured peril . Earthquake Insurance Earthquake Insurance is a form of property insurance that pays the policyholder in the event of an earthquake that causes damage to the property. Most ordinary home insurance policies do not cover earthquake damage. Earthquake insurance policies generally feature a high deductible. Rates depend on location and hence the likelihood of an earthquake, as well as the construction of the home.

CREDIT INSURANCE
Credit insurance repays some or all of a loan when certain circumstances arise to the borrower such as unemployment, disability, or death.

Mortgage Insurance insures the lender against default by the borrower. Mortgage insurance is a form of credit insurance, although the name "credit insurance" more often is used to refer to policies that cover other kinds of debt.

Many credit cards offer payment protection plans which are a form of credit insurance.

ALL- RISK-INSURANCE

All-risk insurance is an insurance that covers a wide-range of incidents and perils, except those noted in the policy. All-risk

insurance is different from peril-specific insurance that cover losses from only those perils listed in the policy. For Example in car Insurance, all-risk policy includes also the damages caused by the own driver.

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