Insurance basics

Insurance-Introduction

What is Insurance ?

Insurance is a protection against

financial loss arising on the

happening of an unexpected event.

Insurance companies collect

premiums to provide for this protection.

A loss is paid out of the premiums

collected from the insuring public.

Insurance Companies act as

trustees to the amount collected

4

Insurance is a contract between

2 parties.

On party called the insurer who undertakes for a

fixed amount called premium

.

To pay the other party called the insured a fixed

amount of money on the happening

of an certain event

.

Fundamental Principles of Insurance

Utmost good faith

Insurable interest Indemnity

Subrogation Contribution Proximate cause

Utmost Good Faith

Insured has a legal duty to disclose all

information about the proposed contract of

insurance to the insurers whether such

information is requested or not.

Utmost Good FaithInsured has a legal duty to disclose all

information about the proposed contract of insurance to the insurers whether such

information is requested or not.

Fire Insurance – Construction, Occupancy,

Stock – nature of goods

Motor Insurance – Cubic Capacity ,

year of manufacture, tonnage, purpose etc.

It constitutes the legal rights to insure arising out of a

financial relationship, recognized as law between the insured and the subject

matter of insurance

Ownership of property Ownership of property Our own life

Insurable Interest

Fnancial compensation sufficient to place the insured in the same

financial position after a loss as he enjoyed

Repair Reinstatement Replacement Money Transfer

Indemnity

Subrogation

This is defined as the transfer of

rights and remedies of the insured to

the insurer who has indemnified the

insured in respect of the loss

Letter of subrogation

Ex : Vehicle theft claim

Contribution An insured may have several insurances on the same subject

matter. If he recovers his loss under all these insurances, he will obviously make a profit out of the loss.

The right of insurers who have paid a loss under a policy to recover a proportionate amount from other insurers who are liable for the same loss.

The common law principle allows the insured to recover his full loss within the sum insured from any insurers he likes.

Proximate Cause

It means the active efficient cause that sets in motion a train of events which brings about a result, without the intervention of any force

started and working actively from a new and independent

source.

A person insured under personal accident policy went out hunting and met with an accident. Due to shock and weakness he was unable to

walk. From the wet ground he contracted cold which

developed into pneumonia which caused his death. The

proximate cause of death was the original accident and

pneumonia is only a remote cause and hence the claim is

payable.

ClassificationGeneral Insurance

Property Insurance

Fire,Burglary,Engineering,Miscellaneous

accident

Motor Insurance

Two Wheeler/Private car/Commercial

Vehicles

Liability Insurance

Employees Liability, Public Liability.

Products liability and professional indemnity

Personal accident & health insurance

Fire Insurance Cover for

Building Machinery, Equipments

Furniture, Fixtures and

fittings

Finished Goods, Stock

in transit, Raw

materials

Type of risks covers under Standard Fire & Special Perils policy

Fire Lightning Explosion/Implosion Aircraft Damage Riot, Strike, Malicious Damage Storm, Cyclone, Tornado, Tempest, Hurricane, Flood and

Inundation Impact Damage Subsidence and Land Slide including Rock Slide Bursting/or overflowing of water tanks, apparatus and

pipes Missile testing operations

Burglary Insurance is to indemnify the Insured against loss or damage

to the property

Burglary Coverage:

Theft of property after actual forcible & violent entry into the

premises by person/persons

Theft of property by a person and subsequently breaking out of the

premises by forcible means

Hold up

Burglary Insurance

Engineering sector – Types of policies

Machinery Breakdown Insurance

Contractor’s All Risk Insurance

Contractors Pant & Machinery Insurance

Boiler & Pressure Plant Insurance

Electronic Equipment Insurance

Machinery Breakdown Insurance

This policy covers all kinds of losses due to accidental, electrical and mechanical breakdowns as a result of internal causes. It covered during the machinery is in

operation or at rest or in the process of being dismantled,

overhauled or during subsequent re-erection at

the same premises.

Extensions

Air freight

Express freight (excluding airfreight),

overtime and holiday wages

Insured’s own surrounding

propertyThird Party

Liability

Machinery Breakdown Insurance covers all kinds of losses

due to accidental, electrical and

mechanical breakdowns as a result of internal

causes

Air freightExpress freight

(excluding airfreight), overtime and holiday

wages

Insured’s own surrounding property Third Party Liability

Contractor’s All Risk The policy covers the civil engineering projects such as buildings,

roads, airports, flyovers, water tanks, sewage treatment plants etc.

Unless specifically excluded, this covers the accidental physical loss or damage to contract works during the execution of a civil engineering project.

Coverage begins from the commencement of works or after unloading of the first consignment at the project site, whichever is earlier, and terminates on handling over of the works to the principal or on expiry of the policy, whichever is earlier.

Main extensions of CAR Policy

Earthquake Act of terrorism EscalationLimited

maintenance cover

Extended maintenance

cover

Clearance and removal of

debris

Damage to owner’s

surrounding property

Third Party Liability Cross liability Express freight

holiday overtime rates of wages

Contractor’s Plant and Machinery

Contractor’s Plant and Machinery Insurance

It covers the loss or damage to the Contractor’s construction mobile equipment such as bulldozers,

cranes, excavators, compressors etc. due to an accident arising out of

external perils. The cover is operative while the insured property

is at work or at the rest, or being dismantled for the purpose of

cleaning or overhauling or during subsequent re-erection.

Extensions

Air freightExpress freight

(excluding airfreight

overtime and holiday wages

Insured’s own surrounding

propertyThird Party

Liability

Clearance and removal of

debrisEscalation Additional

custom duty Act of terrorism

Boiler and Pressure Plant InsuranceThis policy covers boilers of various

kinds, pressure plants and vessels under pressure, including fired and unfired,

against loss and/or damage due to

explosion or collapse

Additional Coverage

Damage to the owners existing

surrounding property

Damage to third party property and/or personal

injury

Express freight (excluding

airfreight), overtime and holiday wages

Airfreight Additional custom duty Escalation

Electronic Equipment SystemIt provides comprehensive coverage for electronic equipment. It includes physical loss or damage to all electronic equipment and data media, as well as the increased cost of working resulting from an accidental and unforeseen physical loss or damage to the electronic equipment.For a nominal

additional premium, the policy can be

extended to cover risk of terrorism.

Motor Insurance

Liability only policy Package Policy

covers Third party liability for bodily

injury and/or death and property damage as specified. Personal

Accident cover for owner driver

included.

covers loss or damage to the vehicle insured

plus liability cover

Risk Covered on Package Policy Indemnifies the insured against loss or damage to the

vehicle insured and/or its accessories by Malicious act Terrorist activity Whilst in transit by road, rail inland-waterway lift, elevator

or air By landslide rockslide

Salient Features of Motor Tariff1. Insured’s Declared Value

(IDV) This is Insured Estimated value in Motor Insurance. It is deemed to be the sum insured for the purpose of Motor Tariff and to be fixed at the commencement of

each policy period for each insured vehicle. It is

calculated on the basis of the manufacturer’s current

listed price of the brand/model and the age of

the vehicle.

Insured Declared ValueUpto 6 months 5%

6 months to 1 year 15%1 year to 2 years 20%2 years to 3 years 30%3 years to 4 years 40%4 years to 5 years 50%

2. No Claim Bonus

This is a discount in the premium allowed at the time of renewal if there is “No claim” during the policy period. The percentage of discount given per

year of renewal is as follows:-

No Claim Bonus1st year Nil2nd year 20%3rd Year 25%4th Year 35%5th year 45%6th year 50%

AIMS Add On…

Competitive premium rate- Discount up to 70% Instant coverage /

Renewal coverage

Claims management services and follow-up

Cashless settlement of claim within 15 days after getting all relevant claims papers

Exclusive experts for claim analysis

Freedom of choice to select the insurer

Liability InsuranceEmployee Liability – WC Policy

Public Liability

Product Liability

Professional Liability

Employee Liability Insurance(Workmen’s compensation Insurance)

This policy covers the statutory liability of an employer for the death of or bodily injuries or occupational diseases sustained by workmen in the insured’s immediate service and arising out of and in the course of employment.

Any employer whether as a principal or contractor engaging “workmen” as defined in the Workmen Compensation Act or any employee who shares the Employer-Employee relationship.

Who needs these policies

Public Liability

This policy provides indemnify to the insured

against their legal liability to pay compensation in

accordance with the Indian Laws which covers the

following

Accidental bodily injury to any person not being a member of the insured family or engaged in the service of the insured.

Accidental loss or damage to property not being property belonging to or in the custody of the insured or any person in the service of the insured.

Product Liability InsuranceCoverage of a manufacturer’s liability for

losses or injuries to a buyer, user or bystander caused by a product defect or malfunction

Accidental death/bodily injury or disease to any third party

Accidental damage to property belonging to a third party

Professional Indemnity

This policy provides protection for

professional like Doctors, Solicitors, Chartered

accountants, Architects et. Against their legal

liability to pay damages arising out of negligence

in the performance of their professional duties

Fidelity Guarantee

CoversFinancial loss sustained as a

result of infidelity, which includes fraud, dishonesty,

forgery, embezzlement, larceny, misappropriation,

default or fraudulent conversion of money or

stocks committed by salaried employees in the course of

performance of duties

This policy is issued to the employers to cover loss the

infidelity of employees occupying positions of trust

involving duties such as handling cash, stock-keeping

etc.

Money/Cash Insurance

This policy intended to protect against loss of

money. It covers the risk of loss of

money/cheques/postal orders/postal stamps by robbery or theft or any other cause whilst in

transit among places to be pre-defined. It also cover cash in safe and

cash in counter

Cash in Transit

Cash in safe

Cash in counter

Medi Claim Insurance

Risk Covered:

Reimburse or Cashless facility for diseases and accidents.

Risk Covered:

Reimburse or Cashless facility for diseases and

accidents

Health Insurance

General Features Age Limit: 3 months to 45/65 Years Sum Insured: Min. Rs.50000/- to Rs.10 Lakhs Nature of treatment: Allopathic/Ayush No Claim Bonus - 5% every year Family Discount:10% to 15% every claim free year Income Tax Benefit: Premium up to Rs.20000/- per year Cost of Health check up 1% of the sum Insured after four

consecutive claim free years. Group discounts according to group size

Health insurance products

Individual Family floater Group Insurance Students

Critical illness Hospital cash Senior citizen Top up policy

Type of Group

Sum Insured

Age Bracket1st, 2nd & 4th year exclusion clause

1st 30 days exclusion clause

Pre-Existing Disease

Room Rent/ICU Charge

Pre & Post HospitalizationCoverage Day Care

Procedures

Features

Cashless treatment/Re- imbursement

claims Sub LimitsCo Payment

Cumulative BonusEmergency Ambulance

ChargesPeriod of Insurance

Approximate number of lives for coverageClaims SettlementMode of treatmentExisting insurance

policy/insurer/claim ratioPremium -Sec 80 D IT exemption

Group/Family -Definition

Smart Scholar InsuranceRisk Cover

Students Mediclaim for diseases and

Accidents: Rs.10000

PA Death cover for student:

Rs.50000

Permanent Total Disability to

Student: Rs.50000

Fee protector-Accidental death for

Parent: Rs.100000

Ambulance charges:

Rs.1000

Cont..

Premium per student per year Rs.

100/ including service tax

Type of policy: Group insurance

covering all students

Insurer: United India Insurance Company

Policy in the name of Educational Institution

Health card for each student

Personal Accident

Permanent Total

Disability

Permanent partial

disability

Temporary Partial/Total Disability

Accident Mediclaim

Weekly Compensati

on

Children’s Education

FundAmbulance

ChargesHospital

Cash

Death Due to accident

Personal Accident-other benefits

Cumulative Bonus

5%

Group Discount

according group size 5%-30%

Family Discount

10%

Universal Risk Cover

Features

Basic Cover

120 times of the monthly

Income

Wider cover

60 times of the monthly Income

Age

18-70 yrs

Different Types of Accidents & Disasters

Vehicle Accident, Road Accident Lift /Escalator Accident Wildfire; Forest Fire Storm, Tempest, Hurricane, Tornado Mining Accident, Mine Blast Cyclone,

Hurricane, Typhoon Fire Accident Rail Accident Ship / Boat Accident Natural Calamities Explosion Attack from Wild Animal’s,

Earthquake/Tremor Hooch Tragedy Landslip, Rock slide Lift Accident Gas Tragedy Air Accident Industrial Accident Firework Accident Flood, Tsunami Snake Bite, Bite from Rabid Dog Electric Shock Fall from Trees & Building,

Term Life Insurance Protection against the unexpected Term policy cover makeup for the loss of your

income Covering financial loss Taking care of long term liabilities Ultimate security for your beloved family Fixing Sum Insured depending upon your age,

income and liabilities Save income Tax under sec 80 C There are different types of Term policies

according to your needs

Insurance policies for a low income family

Type of Insurance Name of Policy Sum Insured Premium

Home InsuranceHouse Holders Package policy Building - 10,00,000 400

    Contents - 2,00,000 200

Private Car Package Policy 3,00,000 5500

Personal Accident PA Policy 25,00,000 2550

Health InsuranceFamily Floater

Mediclaim 1,00,000 2315

Life Insurance Term Insurance 30,00,000 5000Total Sum Insured and premium per

year 71,00,000 15,965

Per day expenses Rs. 44/

Insurance policies for a middle class family

Type of Insurance Name of Policy Sum Insured Premium

Home InsuranceHouse Holders Package policy

Building - 20,00,000 800Contents - 4,00,000 400

Private Car Package Policy 6,00,000 10000Personal Accident PA Policy 50,00,000 6000

Health InsuranceFamily Floater

Mediclaim 4,00,000 6115Life Insurance Term Insurance 50,00,000 8000

Total Sum Insured and premium per year 1,34,00,000 31,315

Per day expenses Rs.86/

Insurance policies for a upper class family

Type of Insurance Name of Policy Sum Insured Premium

Home InsuranceHouse Holders Package policy Building -30,00,000 1200

Contents - 6,00,000 600

Private Car Package Policy 12,00,000 21,000

Personal Accident PA Policy 100,00,000 11000

Health InsuranceFamily Floater Mediclaim 6,00,000 12500

Life Insurance Term Insurance 100,00,000 13500

Total Sum Insured and premium per year 2,54,00,000 59,800Per day expenses Rs.163/

Thank You.AIMS Insurance Broking Pvt. Ltd.19/458, IInd Floor, Global PlazaPoothole P.O., Thrissur- 04Phone: 0487-2386364/2389703Email:[email protected]: www. aimsinsurance.in