Safety is the prime concern and avoiding any mess falls as the next. At times, you might end up facing some unexpected losses for which you were completely unaware. What then? Do you definitely look for some security system? Or just leave things on destiny?
Well! Nothing would work except a security system that backs us. In other words, we need an insurance cover.
“To insure is to protect and indemnify. It does not mean Prevention of loss”.
What is a General Insurance
How does the concept of General Insurance work?
Insurance is a concept that applies to a large group of people who may suffer the same risk in the same conditions or region. The money collected as the premium can be called a pool and when anyone faces a loss, the person is paid from that pool.
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Once we’ve understood what General Insurance is, let us understand how and when will the policy apply.
A Digit’s disclose on how does a loss occur?
The loss may occur due to perils like fire, storm and flood, earthquake, theft, accident, health, travel, and other similar factors.
So now, we know that there exists an asset which is exposed to risk. And in case of the occurrence of losses (subject to the limit of the policy) plays the insurance which pays for the damages.
Why do we need General Insurance?
Imagine you’re driving back home in your car and suddenly, a taxi hits you from behind. Your car has a dent and its bumper has come off too. Now you need about Rs. 2000/- for the dent and Rs.7500/- for the bumper to be able to fix it all.
A car insurance policy, in this case, will play well. You can get the amount reimbursed under the insurance policy. Your car is the asset here in which you have a financial interest. But remember, an insurance policy will pay only as per its predefined conditions.