Insurance is classified according to risk, hazards and type. There are 7 types of insurance. They are ; Life insurance or Personal Insurance, Guarantee Insurance, Marine Insurance, Liability Insurance, Fire Insurance, and Belonging Insurance.
Types of Business Insurance
You can view the list of the 7 main categories of Insurance Business below.
- Life Insurance or Personal Insurance
- Social Insurance
- Liability Insurance
- Marine Insurance
- Property Insurance
- Fire Insurance
- Guarantee Insurance
Let’s learn about these types of insurance one-by-one in the rest of the article.
This type of coverage (Life Insurance) is different from other types. That is because, the core of it is the life of a human being. Undoubtedly, the most valuable belonging of a human is his life. Hence, this makes life coverage enjoy it’s maximum scope. In the present world, each individual needs some type of insurance. At the death, or at the end of the protection period, the insurer will pay back the exact amount of the coverage.
Life insurance provides safety to the family at an unexpected death of a family member. In contrary, when a person’s capacity to earn is declined at his old age, it provides satisfactory financial assistance to him.
Moreover, if you are on a personal insurance, you get a payment when you face an accident. That payment is on behalf of the insurer.
Most importantly, the insurance is not merely a protective measure, but also an investment. A certain part of the money can be returned to the insured. This is done at the death, or at the time of expiration of the coverage period.
Fidelity Insurance is the most strict form of Liability Insurance. When the insured is under the responsibility of payment to the third party, the insurer repays the loss to the insured.
General types of Insurance
Property Insurance, Liability Insurance and other similar forms of Insurance falls under the category of General Insurance.
Marine and Fire Insurances falls under Property Insurance. Also, they are called as Property Insurance. Motor, Machine, Fidelity and Theft Insurances are included under the scope of Liability Insurance, to a certain extent.
Under this type of insurance, the belongings of an individual is insured against a particular risk. So, the risk can be anything from starting from fire or theft of belongings. And, it may go up to damage to goods and marine risks.
If interested, click here and learn in detail about House Owners Insurance.
Mainly marine insurance provides protection against the damages happening by marine risks.
Some examples for marine risks are, attacks by enemies, captures by pirates, collision with rocks or ships, fire, etc. These threats cause destruction to the ship. The ship can even disappear because of these risks.
Therefore, marine insurance protects cargo and freight along with the hull of the ship.
Earlier, only a limited risks were insured. Whereas today, the coverage area of marine insurance is divided into two parts. They are Inland Marine Insurance and Ocean Marine Insurance.
Ocean Marine Insurance only insures the marine dangers. Whilst, Inland Marine Insurance insures inland dangers. Inland dangers normally occur at the delivery of cargo from the go-down of the insured. This may extend up to the point, where the importer (buyer) receives the cargo at his go down.
This type of insurance insures against the risks arising by fire.
The fire waste will spread to the individual as well as to the society, in the absence of a fire insurance.
The society does not lose much because of fire insurance. This insurance repays the losses created because of fire.
The fire insurance does not only insures against damages causing due to fire. This covers damages caused by war, riots and turmoil.
General Insurance includes liability (responsibility) insurance. Here, the insurer should pay for the damage of belongings of the insured. Otherwise, the insurer should pay for the death, injury or loss of a human.
On the other hand, responsibility protection appears in the forms of other insurance types. It comes as automobile insurance, machine insurance and fidelity insurance etc.
This type of protection provides safety to the weaker people of the society. This is for the people who cannot afford to pay for adequate premium insurance.
There are different forms of social insurance. They are disability benefits, illness insurance, pension plans, unemployment benefits and industrial insurance.
Types of Insurance (From risk point of view)
There are four types of Insurance from the risk point of view. They are ;
- Personal Insurance
- Property Insurance
- Guarantee Insurance
- Other types of Insurance (Miscellaneous Insurance)
People experience sufferings, because of death, accident or disease. So, the personal insurance acts at that time. Accordingly, Personal Insurance protects human life at such dangerous situations.
Therefore, personal insurance sub-divides again into three. These types are health insurance, life insurance and accident insurance.
Property Insurance, protects the possessions of an individual from damages by fire, and marine dangers. Additionally, property coverage protects crops against unexpected decrease in production. And also by unexpected death of animals, used in crop production. Additionally, by covering against break-down of machinery and theft of belongings, it safeguards the crop business.
Guarantee insurance protects the losses caused by disloyalty and dishonesty of employees. Also, this covers losses arising due to disappearance of employees. Furthermore, the insurance covers losses occurring due to a second party. Therefore, the party must be a party in the contract. So, the second party causes a loss to the first party.
For example, in an export insurance scheme, there can be a loss due to the failure of the importers to pay the debt. At such times, the insurer will pay for the loss.
Other Types of Insurance
Except for belonging and responsibility insurance, there are other insurance types grouped under general insurance.
State employees coverage and export-credit coverages are some examples of them. In such insurances, the insurer pays a certain amounts at specified times.
This surety spreads speedily these days.
Varied Types of Insurance (Miscellaneous)
There are insurance types covering damage to goods, machine, furniture, vehicles, valuable articles etc. Certain coverage types protect the above against damage causing by accident and theft.
So, there are separate coverage types, for each type of belongings.