General (Non-Life) Insurance
What this domain tests
General insurance questions focus on indemnity-based products, the average clause, motor third-party liability and health policy waiting periods. Numerical items usually apply the average clause or an excess.
Core rules
- Main classes: fire, marine (cargo and hull), motor, health, crop, engineering, liability and home insurance.
- Indemnity is the governing principle: the claim cannot exceed the actual loss or the sum insured.
- Average clause applies when the sum insured is less than the value of the property; the claim is reduced in proportion: claim = loss × sum insured / value.
- Excess or deductible: the first slice of loss is borne by the insured.
- Motor insurance: third-party liability is mandatory under s.146 of the Motor Vehicles Act, 1988; own damage cover is optional. IDV (insured declared value) is the sum insured for own damage. No-claim bonus is available only on own damage premium, not on third-party premium.
- Health insurance: a 30-day initial waiting period, a waiting period for pre-existing diseases (three to four years), and pre- and post-hospitalisation cover; cashless settlement is arranged through a TPA.
- Crop insurance: Pradhan Mantri Fasal Bima Yojana, 2016.
Worked example
Stock worth ₹10 lakh is insured for ₹8 lakh. Fire causes a ₹5 lakh loss. Applying the average clause: ₹5,00,000 × 8/10 = ₹4,00,000. If a ₹10,000 deductible applies, the insured receives ₹3,90,000. The 20% underinsurance is borne by the insured.
Traps that cost marks
- Applying the average clause when the sum insured equals or exceeds the value.
- Claiming no-claim bonus on third-party motor premium.
- Treating IDV as the resale market value of the vehicle.
- Forgetting that pre-existing diseases are excluded during the waiting period.