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All About Insurance http://rakshainvestment.com
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Insurance
Defining Insurance Insurance in broad terms may be described as a method of
sharing financial losses of few from a common fund who are equally exposed to the same loss.
Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium, and can be thought of a guaranteed small loss to prevent a large, possibly devastating loss.
An insurer is a company selling the insurance. The insurance rate is a factor used to determine the amount, called the premium, to be charged for a certain amount of insurance coverage.
Defining RiskA variation in the possible outcomeThe degree of uncertainty associated with a particular lossGreater the accuracy with which the outcome can be predicted the
lower is the risk. Risk is the possibility of an unfortunate occurrenceRisk is the possibility of lossThe combination of hazardsUncertainty of lossThe tendency that actual results may differ from predicted results
Basic Characteristics of InsurancePooling of losses
Spreading losses incurred by the few over the entire groupRisk reduction based on the Law of Large Numbers
Payment of fortuitous losses Insurance pays for losses that are unforeseen, unexpected,
and occur as a result of chanceRisk transfer
A pure risk is transferred from the insured to the insurer, who typically is in a stronger financial position
IndemnificationThe insured is restored to his or her approximate financial
position prior to the occurrence of the loss
Benefits of Insurance to an IndividualPeace of mindAversion of riskProtects mortgaged propertiesProvides self dependencyTool of savingsTool of investmentSatisfies various needs
Benefits of Insurance to BusinessReduced reserve requirementsCapital freed for investment IndemnificationReduction of uncertaintyReduced cost of capitalReduced credit risk Loss control activitiesBusiness and social stability
Benefits of Insurance to SocietyProtects wealth of the country
Helps in economic growth
Control inflation
Insurance Classification
Insurance
Life Insurance General Insurance
Fire Marine Health Auto
Principles of InsuranceUtmost Good Faith
Insurable Interest
Principle of Indemnity
Principle of Contribution
Principle of Subrogation
Principle of loss Minimization
Principle of ‘CAUSA PROXIMA’
General Rules Mis-description
Reasonable care
Fraud
Basic principles Insurable interest Utmost good faith Subrogation Contribution Indemnity
Risk of loss not covered
Types of General InsuranceMain types of general insurance are:
Fire
Health
Marine
Motor Vehicle
Types of Fire Insurance PoliciesSpecific policy
Comprehensive policy
Valued policy
Floating policy
Replacement or Re-instatement policy:
Fire Insurance Claim Procedure
Individuals/corporate must inform insurer as early as possible , in no case later than 24 hours.
Provide relevant information to the surveyor/claim representative appointed by the insurer.
The surveyor then analyzes the extent/ value of loss or damage.
The claim process takes anywhere between one to three weeks.
Documents Required
True copy of the policy along with schedule
Report of fire brigade
Claim Form
Photographs
Past claims experience
What is Health Insurance?Health insurance, like other forms of insurance, is a form of collectivism by means of which people collectively pool their risk, in this case the risk of incurring medical expenses.
Importance of Health Rising medical costs
Sharing of health related risk
uncertain hospital bills
Expensive/quality health care services
Money value – Sick Vs Healthy
Family health insurance
Tax benefit
Productivity of workforce
Types of Health Insurance Plans Individual health plan
Family floater plan
Senior Citizens’ plan
Critical illness plan
Daily hospital cash and
Unit-linked health plan (ULHP).
Defining Marine InsuranceMarine Insurance covers the loss or damage of ships, cargo, terminals, and any transport or cargo by which property is transferred, acquired, or held between the points of origin and final destination.
Two Broad CategoriesOcean marine insurance
Inland marine insurance
Ocean Marine InsuranceHull
Cargo
Freight
Protection and indemnity insurance
Inland Marine InsuranceExtension of Ocean marine insurance
Domestic goods in transit
Property held by Bailees
Mobile equipment and property
Block Policies- “all-risks” basis
Means of transport and communication
Defining Auto InsuranceAuto insurance (also known as vehicle insurance, car insurance, or motor insurance) is insurance purchased for cars, trucks, and other vehicles. Its primary use is to provide protection against losses incurred as a result of traffic accidents and against liability that could be incurred in an accident.
Auto Insurance CoverageAuto insurance provides property, liability and medical coverage:
Property coverage pays for damage to or theft of the car.
Liability coverage pays for the legal responsibility to others for bodily injury or property damage.
Medical coverage pays for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses
Coverage LevelsVehicle insurance can cover some or all of the following items:The insured partyThe insured vehicleThird parties (car and people)Third party, fire and theft In some jurisdictions coverage for injuries to persons riding in the
insured vehicle is available without regard to fault in the auto accident (No Fault Auto Insurance)
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