The insurance contract that covers any type of risk other than life is called general insurance. These contracts ensure that a person or business is protected in case of property damage, accident, fire or earthquake. Insurance types under general insurance include fire, motor, commercial and medical insurance.
Compared to life insurance where premiums are paid throughout the duration of the policy, general insurance premiums are paid yearly in a lump sum. General insurance is considered as a contract for the purpose of protection and not really as an investment since you only get paid to recover your losses or for instances indicated in the policy. If there is no claim after the policy period, the premiums paid are not returned to the policyholder. It is up to the policyholder to renew the policy after a year.
General Insurance Types
How many people truly understand what general insurance is? What does it promise to protect you from?
General Insurance protects the policyholder from losses against unforeseen damages and accidents other than those covered in life insurance.
- Commercial Insurance
This type of insurance offers a protection solution for all sectors of the business industry such as construction, manufacturing, food and beverage, transport, among others. Under the commercial insurance umbrella lies a variety of other insurance policies which is applicable based on the type of business a policyholder owns. Commercial insurance protects businesses, its equipment, and employees.
- Motor Vehicle Insurance
In the United States, if you own a vehicle, you are mandated by law to purchase car insurance. The argument about mandatory car insurance dates back to the onset of the first automobile about 100 years ago.
Motor vehicle insurance offers to protect against loss of vehicle or financial liability a car owner may face if the motor vehicle is involved in a collision resulting in physical or property damage. There is a monthly premium paid in this type of insurance and its amount varies depending on the type of vehicle, driving history, driver’s age and gender and location. Although there are certain states in the country that do not mandate a car owner to carry motor vehicle insurance, they have the option to post cash bonds.
- Health/ Medical Insurance
Often, people confuse Life with that of medical/health insurance. There is a distinction between the two. Life insurance, from the term itself, protects policyholders against the risks of life. Health insurance, on the other hand, is a type of general insurance which covers medical expenses up to a certain amount.