2. DEFINITION
A contract (policy) in which an individual or entity
receives financial protection or reimbursement against
losses from an insurance company. The company pools
clients' risks to make payments more affordable for the
insured.
3. Broadly speaking, insurance carriers may be classified
as:
Life insurance companies, which sell life insurance, annuities and pensions
products. Life, annuity, and pension business is very long-term in nature —
coverage for life assurance or a pension can cover risks over many decades, and
explains why this type of insurance is also called “long term insurance”.
Non-life (or ‘general’) insurance companies that sell "other" types of
insurance. By contrast to life insurers, non-life insurance cover usually covers a
shorter period - such as one year - which is why this type of insurance is also
called “short term insurance”.
General insurance companies can be subdivided into:
Standard lines / personal lines insurers that are typically "main stream"
lines insurers that specialize in motor, home or commercial insurance that
may even be made available directly to the public , or
Excess lines insurers that typically insure risks not covered by the standard
lines market. They are broadly referred as being all insurance placed with non-
admitted insurers. Non-admitted (USA) insurers are not licensed in the states
where the risks are located. These companies have more flexibility and can
react faster than standard insurance companies because they are not subject to
the same regulations.
4. Risk which can be insured by private companies typically shares
seven common characteristics:
Large number of similar exposure units:
Since insurance operates through pooling resources, the
majority of insurance policies are provided for individual members of large
classes, allowing insurers to benefit from the law of large numbers in
which predicted losses are similar to the actual losses.
Definite loss:
The loss takes place at a known time, in a known place, and
from a known cause. The classic example is death of an insured person on a
life insurance policy. Fire, automobile accidents, and worker injuries may
all easily meet this criterion.
Accidental loss:
The event that constitutes the trigger of a claim should be
fortuitous, or at least outside the control of the beneficiary of the
insurance. The loss should be pure, in the sense that it results from an
event for which there is only the opportunity for cost.
Large loss:
The size of the loss must be meaningful from the perspective of
the insured. Insurance premiums need to cover both the expected cost of
losses, plus the cost of issuing and administering the policy, adjusting
losses, and supplying the capital needed to reasonably assure that the
insurer will be able to pay claims.
5. Affordable premium:
If the likelihood of an insured event is so high, or the cost of the event so large, that
the resulting premium is large relative to the amount of protection offered, then it is not likely that
the insurance will be purchased, even if on offer.
Calculable loss:
There are two elements that must be at least estimable, if not formally calculable: the
probability of loss, and the attendant cost.
Limited risk of catastrophically large losses:
Insurable losses are ideally independent and non-catastrophic, meaning that the losses do
not happen all at once and individual losses are not severe enough to bankrupt the insurer; insurers
may prefer to limit their exposure to a loss from a single event to some small portion of their capital
base.
6. How Insurers Determine Your Premium
Many factors affect the premium you pay, including which insurance company
you choose. Different insurance companies charge different premiums for
similar coverage.
Decisions you make about how much insurance coverage to buy also affect your
premium. Some of the other things that are likely to affect your premium are
The characteristics of your home
• The cost to rebuild your home. This is not the same as the purchase price
(which includes the cost of the land). Your insurance agent might help you
estimate replacement cost using information about your home and its
contents.
• Whether your home is made of brick or wood. The premium usually is lower
for homes that are primarily brick or masonry than for wood frame homes.
• The distance from your home to a water source or fire department and the
quality of your community’s fire protection services.
• The age and condition of your home. The premium often is higher for older
homes and homes in poor condition than for newer homes and homes in good
condition.
• The claims history of your home and of homes in your area.
7. Your choices and characteristics
• The coverages you choose, including optional endorsements.
• The deductible you choose.
• Insuring your home and autos with the same insurance
company.
• The length of time you’ve been with your current insurance
company.
• Your credit history.
To access your credit report, the insurance agent might ask you
for your Social Security number. In many states, insurers use
your credit history as a factor to decide whether to sell you
insurance and what price to charge you.
• Your history of filing claims for water damage, fire, theft or
liability on homes you’ve owned
8. Why You Need Insurance
Homeowners insurance is an important purchase for many people. There are
two major reasons to buy homeowners insurance:
• To protect your assets
Homeowners insurance covers the structure of your home and your personal
property, as well as your personal legal responsibility (or liability) for injuries to
others or their property while they’re on your property.
• To satisfy your mortgage lender
Most mortgage lenders require you to have insurance as long as you have a
mortgage and to list them as the mortgagee on the policy. If you let your
insurance lapse, your mortgage lender will likely have your home insured.
Compared to a policy you would buy on your own, the premium might be
much higher and the coverage will be limited to damage to the structure of
your home.
The lender can require you to pay this higher premium until you get your own
Home owners insurance again
9. What are factors affecting car insurance premium?
Motor insurance premium on a motor vehicle in India can be classified into two parts --
own damage premium (OD Premium) and third-party premium (TP Premium).
While own damage (OD) premium is determined by a vehicle's insured declared value
(IDV) (value of the vehicle after depreciation), the third-party (TP) premium is fixed by
the insurance regulator and depends on the volume of the vehicle.
Premium for private vehicle is based on parameters like Insured Declared
Value (IDV),Cubic Capacity (CC) of the insured vehicle, Geographical
Zones and age of the vehicle.
10. Insured Declared Value (IDV) of the vehicle : This is a
function of current showroom price
Cubic Capacity : Cubic capacity is segregated in three
slabs viz.
Less than 1000 cc
More than 1000 cc but less than 1500 cc
More than 1500 cc
Geographical Zones : For the purpose of rating, India has
been divided into the following zones depending on the
location of the office of registration the vehicle.
Zone A: Zone A includes Ahmedabad, Bangalore, Chennai,
Hyderabad , Kolkata, Mumbai, New Delhi and Pune.
Zone B: It includes rest of India.
Age of the Vehicle
Not exceeding seven years
11. What is IDV?
The Insured Declared Value (IDV) is decided on the
basis of manufacturer’s listed selling price of the brand
and model of the vehicle. It is basically the depreciated
value of the vehicle agreed upon by the insurer and the
policyholder The IDV of the vehicle reduces with age.
However, if any electrical and /or electronic items are
installed separately, which are not included in the
manufacturer’s selling price, their IDV is decided
independently at an extra cost.
Recently, Third-Party (TP) premium rates were
increased by the regulator. Owners of cars will
have to shell out a third party premium based on
cubic capacity of the vehicle as mentioned below.
12. Types of Policies
Types of Homeowners Policies
To be reimbursed for damage to your property, a covered peril (such as
fire, theft or windstorm) must have caused your loss. Which perils your
policy covers depends on the type of policy you buy. The most common
types of homeowners policies are listed below. All of the policy types
except the dwelling fire form cover your dwelling and its contents, as
well as personal liability and medical payments.
• The Dwelling Fire Form covers only your dwelling. It does not cover
your personal property, personal liability or medical payments. It also
covers only a few perils. It’s the type of policy your mortgage lender will
buy for you if you let your homeowners policy lapse. It’s also used for
vacation homes and when you can’t find other coverage.
13. • The Modified Coverage Form is for older homes, where
the cost to rebuild is greater than the market value. It
covers the same set of perils as the Basic Form.
• The Special Form is the most popular of all homeowners
forms. It insures your property against all perils, except
those the policy specifically names as notcovered. Perils
commonly excluded are flood and earthquake.
• The Tenants Form is for renters. It insures your personal
property against all of the perils in the Broad Form.
• The Condominium Unit Owners Form is for owner-
occupants of condominium units. It insures your personal
property and your walls, floors and ceiling against all of the
perils in the Broad Form.
14. UNITED INDIA INSURANCE Co . Ltd
United India Insurance Company Limited (UIIC)
is the one among the 4 public General Insurance
Companies of India and a leading General Insurance
player including public and private sector. With the
networth of Rs 4,587 croreas as on September 30, 2011,
The company has more than three decades of
experience in Non-life Insurance business. It was
formed by the merger of 22 companies, consequent to
the nationalisation of General Insurance companies in
India. Its Head Quarters is at 24, Whites Road,
Chennai, India.
15. About the company
United India Insurance Company Limited was incorporated as a Company on
18 February 1938. General Insurance Business in India was nationalized in 1972.
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. After nationalization United India
has grown by leaps and bounds and has 18300 work force spread across 1340
offices providing insurance cover to more than 1 Crore policy holders. The
Company has variety of insurance products to provide insurance cover from
bullock carts to satellites.
United India has been in the forefront of designing and implementing complex
covers to large customers, as in cases of ONGC Ltd, GMR- Hyderabad
International Airport Ltd, Mumbai International Airport Ltd Tirumala-
Tirupati Devasthanam etc. It has been also the pioneer in taking Insurance to
rural masses with large level implementation of Universal Health Insurance
Programme of Government of India & Vijaya Raji Janani Kalyan Yojana (
covering 45 lakhs women in the state of Madhya Pradesh), Tsunami Jan Bima
Yojana (in 4 states covering 4.59 lakhs of families), National Livestock
Insurance and many such schemes. It has also made its presence in more than
200 tier II & II towns and villages through its innovative Micro Offices.
16. Types of insurance
Auto insurance
Main article: Vehicle insurance
Auto insurance protects the policyholder against financial
loss in the event of an incident involving a vehicle they
own, such as in a traffic collision.
Coverage typically includes:
Property coverage, for damage to or theft of the car;
Liability coverage, for the legal responsibility to others for
bodily injury or property damage;
Medical coverage, for the cost of treating injuries,
rehabilitation and sometimes lost wages and funeral
expenses.
17. Gap insurance
Main article: Gap insurance
Gap insurance covers the excess amount on your auto
loan in an instance where your insurance company
does not cover the entire loan. Depending on the
companies specific policies it might or might not cover
the deductible as well. This coverage is marketed for
those who put low down payments, have high interest
rates on their loans, and those with 60 month or
longer terms.
18. Health insurance
Health insurance policies cover the cost of medical
treatments. Dental insurance, like medical insurance
protects policyholders for dental costs.
19. Accident, sickness and unemployment insurance
Disability insurance policies provide financial support in the event of
the policyholder becoming unable to work because of disabling illness
or injury. It provides monthly support to help pay such obligations as
mortgage loans and credit cards.
Long-term disability insurance covers an individual's expenses for the
long term, up until such time as they are considered permanently
disabled and thereafter.
Disability overhead insurance allows business owners to cover the
overhead expenses of their business while they are unable to work.
Total permanent disability insurance provides benefits when a person
is permanently disabled and can no longer work in their profession,
often taken as an adjunct to life insurance.
Workers' compensation insurance replaces all or part of a worker's
wages lost and accompanying medical expenses incurred because of a
job-related injury.
