wealthfactsheet-general

What is non-life (general) insurance?

By its definition, non-life means anything that are not living things (human beings) would be considered to be non-life or general under the insurance term.

Unlike life insurances, non-life or general insurance protects properties on a very different basis, known as 'indemnity'. To indemnify a loss means that if a particular property is worth say, $1,000, the insurance bought on that particular $1,000 property will indemnify for the maximum of $1,000 only and not anything more. It could also indemnify at a lower value depending on the valuation of the loss. That is why we have 'loss adjustors' to value the loss of the property whenever an insurance claim is filed.

The first-loss basis prevails in non-life or general insurance. It is just suppose to protect on loss or total loss of the property which will most of the time, when it happens leave catastrophic financial loss to people if a property is lost due to various circumstances.

Therefore non-life or general insurance is never view a as future economical loss and can never be calculated base on that and that nobody is suppose to profit from a non-life insurance claim.

Uses of non-life/general insurance
Just about anything could be insure, if we can place a value on a property and an most importantly if an insurance company is willing to insure it.

For example, if we remember Hurricane Katrina which was a major catastrophic event where major losses occured up to the millions. We used this as an example.

Many homes were destroyed as a result of Hurricane Katrina. The value of each home is now priceless because imagine if your home is one of them affected by the hurricane and if you had not bought an insurance policy on your home, how much would you pay to get one now?

This is the principle of insurance, a pooling of resources together in the event of a loss, and the resources is the thing that will cushion the loss. In this case the extra resources would be financial and in this context it is what you call, insurance monies.

Types of non-life/general insurance?
You need to know that there are many kinds of non-life policies that may be available to just about anybody.

These are the following that wil be discussed:
Motor... Travel... Fire... Cotents... Fire & Theft... Business... Liability... Property... Marine... Money In Transit... Professional Indemnity... Golfer's Insurance... Mobile (Cell) Phone Insurance... Lloyds of London

Frequently Asked Questions
1. What are exclusions and why is it so common in non-life insurances?
Exclusions are events occuring that the insurance company does not pay a claim.

For example, hypothetically, if you a living in tornado alley and you want to insure your house, the likely exclusion the insurance company will impose on you will be loss due to the caused of tornado. Which means if your home is hit by a tornado, your claim for loss on your house is likely to be declined.

Exclusions are very common because, exclusions help insurance companies to limit on unnecessary losses because just about anything could be a loss and if insurance company starts to insure everything, they are likely to incur heavy financial losses themselves.

One example that come to mind was during the early 90's, when another catastrophic event occured, Hurricane Hugo. This event caused a re-insurance company in Singapore to sufer heavy financial losses because they undertook most of the liability and as such when the loss occured, they found that they could not pay the claims. As a result they went into receivership.

2. I want to buy a fire insurance policy on my house but how do I know if I bought the right insurance policy?
Always first ask yourself what you want to protect. List them down because that is your primary concern. With that list go to a few insurance company that offer fire insurance and ask them if they do provide coverage for your primary concern. If they do then you are on the right track.

3. Does my sex or age affect the premium?
Generally, non-life or general insurance do not consider sex or age as a critical factor when calculating premiums.

However in motor insurance, age may be considered as a factor when deciding on fair premium range. The reason is because the likelyhood of an accident occuring to a person age say 18 to 25 and 65 to 75 is higher compared to a person age say from 26 - 64. As such the younger and the older group will likely pay a higher premium range than say the middle group.

Types of Non-Life/General Insurance:
1. Motor Insurance
2. Fire Insurance
3. Travel Insurance
4. Contents Insurance
5. Property Insurance
6. Business Insurance
7. Liability Insurance
8. Marine Insurance
9. Others...