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One of the major components of personal finance is insurance. While life insurance is common and popular, other forms of insurance under general insurance are also crucial. This is primarily because life insurance only covers the life, whereas other types of general insurance cover losses or expenses incurred for health, automobile, travel, propertly and more. This blog describes the contents of general insurance, the types of general insurance, benefits and more.
Key Takeaways
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General insurance protects against financial losses and exepenses related to non-life assets, such as health, vehicles, travel, and property.
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Policies operate on the principle of indemnity, in which insurers compensate for actual losses or expenses in accordance with the coverage terms.
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Common types of general insurance include health, motor, travel, property, marine, and commercial insurance.
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Selecting suitable coverage depends on assets owned, risk exposure, insurer claim ratios, and policy conditions.
What is General Insurance?
General insurance covers daily assets and activities, whereas life insurance pays out upon death or maturity. In general insurance, you get coverage for financial risks that are not related to human life. It is used to cover property damage, medical expenses, vehicles, and business liabilities.
Once an event covered by the policy occurs, you are compensated for the loss or expenses in accordance with its provisions. The ideal coverage depends on several factors and an understanding of the policies under general insurance can help you choose the best one.
How Does General Insurance Work?
Like any other type of insurance, at its core, general insurance is also a financial protection product based on the principle of indemnity, where you are compensated for the actual value of your loss.
When you purchase any general insurance plan, you must choose the amount of coverage (the Sum Insured), the tenure of the policy and the add-on riders you require, if any. Based on these factors and several other relevant parameters, such as the age of the asset or your personal health history, the insurer will determine the premium to be quoted for the policy.
You can customise the frequency of premium payments (such as annual or, in some cases, monthly) depending on the type of policy and its terms and conditions. Once you make the first premium payment, the cover is typically activated, though some policies, like health insurance, may have an initial waiting period.
If any of the contingencies covered occur during the policy term, you need to raise a claim, which the insurer will review and either approve or reject. When approved, you will receive financial payouts (either via reimbursement or a cashless facility) for the expenses or losses incurred. If the claim is rejected, you can check the rejection letter to understand the reason and take appropriate action.
Many types of general insurance plans also require you to choose a deductible, which is essentially a part of the claim that you pay out of pocket. This effectively reduces the amount the insurer needs to pay, thereby lowering the risk they take on. Similarly, it can lower your premium since you are taking on part of the risk yourself.
Types of General Insurance
Since there are various types of non-life assets, you can choose from different types of general insurance in India based on the asset that you want to cover. Here is an overview of the common types of insurance under this category.
1. Health Insurance
Health insurance is a type of general insurance that covers financial contingencies related to your health. Some contingencies and expenses commonly covered by health insurance plans include accidents, hospitalisation, pre-hospitalisation expenses, and post-hospitalisation costs.
Additionally, this type of insurance may also cover the cost of surgery and treatments for certain specified illnesses. Per recent IRDAI guidelines, health insurance now offers reduced waiting periods for pre-existing diseases (up to 3 years) and provides more comprehensive coverage for AYUSH (alternative) treatments.
Also Read: How to Select a Health Insurance Policy?
2. Vehicle Insurance
Also known as motor insurance, this type of general insurance covers losses and expenses related to your two-wheeler or four-wheeler. Vehicle insurance is typically of the following types:
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Third-Party Liability Cover
This type of insurance covers any liabilities you may incur towards third parties on account of your vehicle. For instance, if you have to compensate another rider due to an accident involving your vehicle, third-party vehicle insurance has that covered. This cover is a legal requirement under the Motor Vehicles Act.
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Own Damage Cover
Own damage insurance covers the costs of repairing your own vehicle following an accident or a natural disaster. This ensures that any damage to your vehicle is rectified without any major financial outlay.
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Comprehensive Cover
A comprehensive vehicle insurance cover offers protection from financial liabilities incurred towards third parties as well as your own vehicle. While third-party cover is mandated by law in India, a comprehensive cover offers broader benefits and can be enhanced with add-ons such as Zero Depreciation.
3. Travel Insurance
While travel may not be a quantifiable asset, travel insurance offers financial protection on two other invaluable assets — your health and your life — whenever you travel. This type of general insurance is useful if you want financial protection in the case of contingencies like falling ill during a vacation or a business trip, loss of baggage, flight cancellations, or even in the case of the traveller’s demise.
4. Home Insurance
This insurance plan covers financial losses or expenses incurred due to emergencies involving your home's structure and its contents (such as electronics and furniture). Some examples of contingencies covered include property damage from fires, earthquakes, and other natural or man-made disasters; burglary or theft; and any other such emergencies. Standardised products like Bharat Griha Raksha have made these policies easier for homeowners to understand.
5. Marine Insurance
Marine insurance covers the products shipped across the sea, air or land. It is used by businesses to cover damage to cargo, theft, or any form of transport accidents.
6. Rural Insurance
Rural insurance promotes agriculture and rural lives. It can be used to insure farm equipment, livestock, crops or rural property based on natural events or loss of operation.
7. Mobile Insurance
Mobile insurance covers damage, theft or accidental loss of smartphones. Repair and replacement costs are included in the policy limits.
8. Bicycle Insurance
Bicycle insurance is used to insure against bike theft or accidental damage. It is becoming popular among city riders and delivery workers who ride bicycles as a daily mode of transportation.
9. Commercial Insurance
The insurance offered by the commercial segment covers the businesses against risks that affect the operation of the business, including property damage, liability claims, loss of equipment or employee-related hazards.
10. Other General Insurance
They also have other types such as commercial, mobile, corporate, and crop insurance. The plans address various aspects of everyday living or wealth ownership.
Read More About: Types of Insurance Policies
Difference Between General Insurance and Life Insurance
Life insurance and general insurance are the two broad insurance categories in India. Both types of insurance serve different purposes and have distinct features. Here’s a table outlining some of the most important differences between life and general insurance.
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Particulars |
Life Insurance |
General Insurance |
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Purpose |
To offer financial security to the nominees listed in the policy in the event of the policyholder’s death, or provide maturity benefits to the policyholder |
To offer financial protection from losses arising due to certain events, contingencies and uncertainties (based on the principle of indemnity) |
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Type of Risks Covered |
Covers the risk of loss of life and longevity (retirement) |
Covers a wide range of non-life risks such as accidents, property damage and third-party liabilities, among others |
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Tenure |
Typically has a long tenure, ranging from several years to the entire lifetime of the policyholder |
Usually short-term (1 year), but multi-year plans (3-5 years) are now common for certain insurance, like health |
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Premium |
Life insurance premiums can be higher due to the savings element, except in the case of a term plan |
General insurance premiums are generally lower and typically paid as a single annual or multi-year lump sum |
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Investment Component |
Some life insurance plans have a savings or investment component and provide a maturity benefit |
General insurance plans don’t have any savings or investment component |
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Types of Policies |
Life insurance plans can be categorised into term insurance, whole life insurance, endowment plans, annuity plans, child plans, retirement plans and Unit Linked Insurance Plans (ULIPs) |
Different types of general insurance plans are motor insurance, health insurance, travel insurance, property insurance, liability insurance and cyber insurance |
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Beneficiary |
The beneficiary is the nominee (in case of death) or the policyholder (in case of maturity) |
The beneficiary is usually the policyholder (to reimburse the actual financial loss incurred) |
Benefits and Features of General Insurance in India
General insurance policies are feature-rich and offer a plethora of benefits to the policyholder. Here’s a quick overview of some of the key advantages and features offered by these insurance policies.
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Financial Protection
General insurance policies are designed to financially compensate you for the losses you suffer due to certain events and incidents. The payout from the policies can help reduce or mitigate the negative impact on your finances due to unexpected events.
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Comprehensive and Diverse Coverage
General insurance policies provide financial coverage for a wide range of areas such as travel, health, motor vehicles and property. Furthermore, you also get to enjoy comprehensive coverage against a substantial number of events, uncertainties and contingencies.
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Liability Insurance
In addition to providing coverage for damages to the insured product, general insurance policies also offer financial protection against third-party liabilities, such as damage or injuries to third parties caused by the insured product.
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Customisability
One of the primary features of general insurance in India is customisability. You have the flexibility to choose the terms of the policy according to your needs. Right from the sum assured amount and tenure to the deductible amount and riders, you have complete freedom to choose the policy coverage.
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No Claim Bonus
Some general insurance policies offer a feature called No Claim Bonus (NCB). It gets activated if you don’t lodge a claim during a year and provides a discount on your Own Damage (OD) premium at the time of renewal. Furthermore, the discount percentage increases with every consecutive year of zero claims, typically starting at 20% and topping out at a maximum of 50%. In health insurance, NCB often works as a "Cumulative Bonus" that increases your sum insured for free.
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Cashless Claim Settlements
With certain general insurance plans like health insurance and motor vehicle insurance policies, you get to avail of cashless claim settlements. In a cashless claim, the insurer pays the claim amount directly to the network hospital or motor vehicle garage. Under the recent "Cashless Everywhere" initiative, you can now potentially access cashless treatment even at non-network hospitals by following specific notification protocols.
List of General Insurance Companies in India
All General Insurance Companies in India operate under the supervision of the Insurance Regulatory and Development Authority of India (IRDAI). The market includes both public sector and private sector insurers.
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Public Sector General Insurance Companies in India |
Private Sector General Insurance Companies in India |
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The New India Assurance Company Ltd. |
ICICI Lombard General Insurance |
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United India Insurance Company Ltd. |
HDFC ERGO General Insurance |
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National Insurance Company Ltd. |
Bajaj Allianz General Insurance |
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The Oriental Insurance Company Ltd. |
Tata AIG General Insurance |
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Agriculture Insurance Company of India Ltd. |
SBI General Insurance |
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ECGC Ltd. |
Reliance General Insurance |
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Go Digit General Insurance |
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Acko General Insurance |
All General Insurance Companies in India operate under the supervision of the Insurance Regulatory and Development Authority of India (IRDAI). The market includes both public sector and private sector insurers.
List of Documents Required for Buying a General Insurance Policy
The documents required for purchasing general insurance can vary depending on the type of policy and the general insurance company you opt for. Since 2023, KYC (Know Your Customer) has been mandatory for all insurance purchases in India. Here’s a brief overview of some of the common documents you need to submit when buying general insurance:
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Proof of identity (Aadhaar, PAN card, or Passport)
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Proof of address (Aadhaar, Voter ID, or Utility Bills)
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Recent passport-size photographs
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Proof of bank account (Cancelled cheque or Passbook for NEFT)
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In addition to this, you will have to submit documents related to the asset you are buying the policy for. For instance, you need to submit the Registration Certificate (RC) of the vehicle in the case of a motor vehicle insurance policy and the previous policy copy if you are claiming a No Claim Bonus (NCB).
In addition to this, you will have to submit documents related to the asset you are buying the policy for. For instance, you need to submit the Registration Certificate (RC) of the vehicle in the case of a motor vehicle insurance policy.
How To Raise a Claim on a General Insurance Policy?
If an event insured by a general insurance policy happens, you need to lodge a claim with the insurance provider to get financial compensation. There are two types of claims that you can raise - a reimbursement claim or a cashless claim.
A reimbursement claim is where you pay for the damages out of pocket and then get the expenses reimbursed from the insurance provider after submitting original bills and a discharge summary. A cashless claim, on the other hand, is one in which the insurance company pays the service provider directly for the damages.
Under the new "Cashless Everywhere" initiative, you can now potentially access cashless facilities even at non-network hospitals, provided you notify your insurer at least 48 hours before a planned admission or within 48 hours of an emergency.
To raise a reimbursement claim, you need to inform your insurer of the incident within the stipulated timeline (usually 24-48 hours), fill out the claim form, and submit the necessary bills and other documents as evidence. For a cashless claim, you must provide your insurance desk with your policy details and a valid ID (like Aadhaar). The insurance company will then issue a pre-authorisation to the service provider and settle the bills on your behalf.
What Are the Different Types of Claim Ratios for General Insurance Policies?
Before you choose a general insurance provider, you need to look at a couple of claim ratios, ios such as the Claim Settlement Ratio (CSR) and the Incurred Claim Ratio (ICR). Being aware of these two ratios can help you gain a deeper understanding of the insurance company and its health. Let’s delve deeper into each of these ratios and find out what they are.
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Claim Settlement Ratio (CSR)
The Claim Settlement Ratio is a metric that indicates the number of claims settled out of the total claims received by an insurance company and is usually expressed as a percentage. For instance, if a general insurer has a CSR of 96%, it means that the entity settles 96 out of every 100 claims it receives. The higher the CSR, the better, since it increases the perceived probability of claim settlement. However, it is important to note that CSR only tracks the number of claims, not the total monetary value paid out.
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Incurred Claim Ratio (ICR)
The Incurred Claim Ratio, on the other hand, is a metric that compares the total value of claims paid with the total premiums received by an insurance company. The ideal ICR range is usually between 70% and 90%. An insurer may sometimes have an ICR of greater than 100%. This is undesirable for the company's long-term sustainability since it effectively means that the insurance company is paying out more in claims than it is collecting in premiums, which leads to financial losses. Conversely, an ICR below 50% might suggest that the company is charging very high premiums or being overly strict with claim approvals.
What Are the Tax Benefits of General Insurance Plans?
Health insurance is the primary type of general insurance in India that offers tax benefits. As per Section 80D of the Income Tax Act, 1961, you can claim the premiums paid towards a health insurance policy for yourself, spouse, dependent children, and your parents as a deduction from your total taxable income.
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Premium Paid For |
Age of Individuals Covered |
Maximum Amount of Deduction |
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Self, Spouse, & Children |
Less than 60 years old |
₹25,000 |
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Self + Parents |
Both are less than 60 years old |
₹50,000 (₹25,000 + ₹25,000) |
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Self + Parents |
Self - less than 60 years old; Parents - 60 years or older |
₹75,000 (₹25,000 + ₹50,000) |
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Self + Parents |
Both are 60 years or older |
₹1,00,000 (₹50,000 + ₹50,000) |
By using the provision of section 80D of the Income Tax Act, you can reduce your overall taxable income by up to ₹1 lakh, which enables you to save taxes significantly.
Additional Key Features:
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Preventive Health Check-up: You can claim up to ₹5,000 for health check-ups within the overall limits mentioned above.
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Payment Mode: To qualify for the deduction, premiums must be paid via digital modes, cheque, or draft. Cash payments for premiums are not eligible for tax benefits (except for preventive check-ups).
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GST Update: As of late 2025, GST on individual and family health insurance premiums has been exempted (0%), making policies more affordable.
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By using the provision of Section 80D of the Income Tax Act, you can reduce your overall taxable income by up to ₹1 lakh, which enables you to save taxes significantly under the Old Tax Regime.
Note: The deductions u/s 80D are only available if you opt for the Old Tax Regime; the New Tax Regime does not offer these benefits.
Things to Remember while Buying a General Insurance Policy
Purchasing general insurance in India is a very important financial decision. One that should be made after thorough deliberation to ensure that it meets your needs. Under the new 2024-2026 IRDAI guidelines, several consumer-friendly updates have been introduced. Let’s look at some key things you need to consider when buying a general insurance plan.
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Sum Assured and Tenure: Choosing the right sum assured and tenure is key to ensuring that the general insurance policy meets your specific needs. Make sure you identify the risks you want to protect yourself from before arriving at the tenure and sum assured amount. For motor insurance, specifically check the Insured Declared Value (IDV) to ensure your vehicle is not under-insured.
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Policy Terms and Conditions: Reading through and understanding the various terms and conditions of the general insurance policy is crucial. Insurers are now mandated to provide a simplified, one-page Customer Information Sheet (CIS) that highlights key details. Remember to look into the inclusions, exclusions, policy limitations, and the newly capped 3-year maximum waiting period clauses for pre-existing diseases.
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Information Disclosure: When filling out the general insurance proposal form, disclose all material information truthfully and honestly. This will ensure that you don’t run into any issues or delays when lodging a claim and reduce the chances of rejections significantly.
Note the 'Moratorium Period' after 5 years of continuous health coverage, insurers generally cannot reject a claim based on non-disclosure of health facts. However, they can and may reject the claim in case of proven fraud.
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Network Providers: In the case of health and motor insurance, check the list of network providers of the insurance company. However, thanks to the "Cashless Everywhere" initiative, you can now access cashless facilities even at non-network hospitals by notifying your insurer 48 hours in advance for planned treatments.
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Available Riders: Riders are optional add-ons that you can opt for when purchasing a general insurance policy. These add-ons enhance insurance coverage for a nominal additional premium. Common riders include Zero Depreciation for cars or Critical Illness covers for health. Make sure to check if the insurance company you opted for offers the riders you need.
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Claim Settlement Ratio and Insured Claim Ratio: As you’ve already seen, CSR and ICR are two of the most important ratios you need to factor in when purchasing general insurance in India. It is advisable to opt for an insurer with a high CSR (ideally above 95%) and an ICR ranging between 70% to 90% for a balanced mix of reliability and sustainability.
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Policy Comparison: No two general insurance policies of the same type may offer the same benefits at the same premiums. It is important to compare the plans of different insurers. Also, you have a "Free-Look Period" to review your policy and cancel it if the terms are not what you expected. The applicability of this period depends on the terms of the insurer and policy.
Conclusion
General insurance plays a very important role in financial protection. It includes asset-related risks, medical expenses, travel problems, and company risk, not life events. People are able to make the coverage meet their financial needs by knowing the policies and types available. Insurance cannot remove risk; it only helps to mitigate the financial effect of the risk of an unforeseen event. General insurance is a viable instrument for long-term financial stability, since these policies are chosen to align with the owned assets or are exposed to risks.
