7 Types of Insurance – What You Must Know

7 Types of Insurance – What You Must Know

What are the 7 types of insurance?

The 7 Types of Insurance include; Life Insurance or Personal Insurance, Property Insurance, Marine Insurance, Fire Insurance, Liability Insurance, Guarantee Insurance. Insurance is categorized based on risk, type, and hazards.

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7 Types of Insurance Business are;

• Life Insurance or Personal Insurance.
• Property Insurance.
• Marine Insurance.
• Fire Insurance.
• Liability Insurance.
• Guarantee Insurance.
• Social Insurance.

These types of insurance listed above are explained below.

• Life Insurance

What is life insurance?

Life Insurance differs from the other types of insurance on the account that, here, the subject matter of insurance is basically concerned with the life of a human being.

The insurer is very much expected to pay the fixed amount of insurance at the period of death or at the expiration of a certain period.

These days, life insurance exclusively enjoys maximum scope, this is due to the fact that life is the most precious and valuable property of a person.

Undoubtedly, each and everyone certainly requires life insurance.

This insurance ensures and provides protection to the family at the premature death or gives an adequate and substantial amount at the old age when the earning capacities are reduced.

Talking about personal insurance, a payment is made at the accident.The insurance does not only serve as a protection but is also a sort of investment because a certain sum of money is returnable to the insured at the death or the expiry of a period.

• General Insurance

General insurance is a type of insurance that includes Property Insurance, Liability Insurance, and Other Forms of Insurance.

Fire and Marine Insurances are strictly referred to as Property Insurance. Motor, Theft, Fidelity and Machine Insurances include the extent of liability insurance to a certain extent.

Fidelity insurance is said to be the strictest form of liability insurance because the insurer compensates the loss in terms of money to the insured when he is under the liability of payment to the third party.

• Property Insurance

Now let's talk about property insurance –The property of person/persons are insured against a certain specified risk. The risk may either be fire disaster or marine perils, theft of property or goods or can also be damage to property at the accident.

• Marine Insurance

Marine insurance gives protection against the loss of marine perils.

The marine perils may include; collision with a rock or ship, enemies attack, fire disaster, militants attack, and captured by pirates, etc. these perils cause damage, destruction or disappearance of the ship and cargo and can also be non-payment of freight.

So, marine insurance basically insures ship (Hull), cargo and freight.

In times past, only certain nominal risks were usually insured but as at now, the scope of marine insurance had been splitted into two parts; Ocean Marine Insurance and Inland Marine Insurance.

The Ocean Marine Insurance insures only the marine perils while the Inland Marine Insurance covers inland perils which may eventually arise with the delivery of cargo (goods) from the go-down of the insured and may stretch out to the receipt of the cargo by the buyer (importer) at his go down.

• Fire Insurance

Fire Insurance as the name implies covers the risk of fire.

In the absence of fire insurance, the fire waste will extend or spread out not only to the individual but to the vulnerable society as well. But with the help of fire insurance, the losses incurred due to fire outbreak are well compensated and the society is not losing much.

The individual is mostly preferred from such losses and his property or business or industry will remain almost in the same position in which it was right before the loss.

Please note that the fire insurance does not protect only losses but it also provides certain consequential losses. War risk, turmoil, riots, chaos and many other related circumstances can be insured under this insurance, too.

• Liability Insurance

The General Insurance which also includes liability insurance whereby the insured is obliged to pay the damage of property or to compensate for the loss of persona; injury or death.

This insurance is considered in the form of fidelity insurance, automobile insurance, and machine insurance, etc.

• Social Insurance

The social insurance is meant to provide protection to the weaker sections of the society who are found to be unable to afford the premium for adequate insurance.

The various forms of Social Insurance may include Pension plans, disability benefits, unemployment benefits, sickness insurance, and industrial insurance.

Classification of Insurance according to risk.

Insurance can also be classified into 4 different categories from the risk point of view.

• Personal Insurance

The personal insurance consists of insurance of human life which may suffer a loss due to death, accident, war and disease.

Therefore, personal insurance is then further sub-divided into life insurance, personal accident insurance, and health insurance.

• Property Insurance

The property of an individual and that of the society is protected or insured against loss from fire and marine perils, the crop is also insured against an unexpected and sudden decline in deduction, unexpected loss and death of the animals used for business, break-down of machines and theft of the property and goods.

• Guarantee Insurance

The guarantee insurance protests and covers the loss arising due to dishonesty, disappearance, and disloyalty of the workers and employees or second party. The party must effectively be a party to the contract. His failure causes any form of loss to the first party.

For instance, in export insurance, the insurer will compensate the loss arising at the failure of the importers to fulfill the payment of the amount of debt.

Other Forms of Insurance

Aside from the property and liability insurances, there are some other forms of insurances that are included in general insurance.

Examples of such insurances include export-credit insurances, State employees’ insurance, and many more. whereby the insurer agrees to pay a certain amount at certain events.

This forms of insurance is increasing rapidly these days.

• Miscellaneous Insurance

Miscellaneous Insurance includes property, goods, machine, Furniture, automobiles, valuable articles, etc. All these can be insured against the loss, damage or destruction due to accident or disappearance due to theft.

There are several various forms of insurances for each type of the mentioned property whereby not only property insurance exists but liability insurance and personal injuries also are the insurer.