What is general insurance?
General insurance, also called non-life insurance, is a contract in which an insurer agrees to compensate you for specified financial losses in exchange for a premium. The cover runs for a defined policy period — usually twelve months — and is renewed when that period ends.
The idea is simple. Many people pay a modest premium into a pool, and the few who suffer a covered loss are paid from that pool. What you can claim, and how much, is defined entirely by the wording of your policy document.
General insurance vs life insurance
- What is protected. Life insurance pays on death or maturity. General insurance pays for damage, loss, liability or medical expenses.
- Duration. Life policies often run for decades; general policies are short-term and renewable.
- Payout basis. Most general insurance is indemnity-based — it restores your financial position up to a limit, rather than paying a fixed sum.
- Savings element. General insurance is pure protection with no maturity value.
Major types of general insurance in India
- Motor insurance — third-party liability cover is mandatory for vehicles used in public places, with own-damage cover available on top. Read the motor insurance guide.
- Health insurance — individual plans, family floaters and top-up plans for hospitalisation costs. Read the health insurance guide.
- Home and property insurance — cover for the structure, the contents, or both, against fire and listed perils.
- Personal accident insurance — a benefit paid on accidental death, permanent disability or specified injuries.
- Travel insurance — medical treatment abroad, trip interruption and baggage cover for a defined trip.
- Commercial and liability insurance — cover for businesses, goods in transit, shops, machinery and legal liability.
How insurance premiums work
A premium is the price of the cover for the policy period. Insurers set it by estimating how likely a claim is and how expensive it would be. The main inputs differ by product, but the pattern is consistent.
- The sum insured — a larger limit usually costs more.
- Risk factors such as age, medical history, vehicle model, location or use.
- Claim history — a clean record can attract a discount such as No Claim Bonus.
- Deductibles and co-pay — accepting more of the loss yourself reduces the premium.
- Add-ons and riders, each of which carries its own cost.
- Applicable taxes and statutory charges.
Sum insured
The sum insured is the maximum amount the insurer will pay during the policy period. In health insurance it is the annual ceiling on hospitalisation claims. In motor insurance, the equivalent for own damage is the Insured Declared Value.
Setting it too low is the most common mistake. A ₹3 lakh health cover looks affordable until a single hospitalisation exceeds it. Choose a figure based on what a realistic serious event would cost in your city, not on the premium alone.
Coverage
Coverage describes exactly which events and expenses the policy pays for. Read this section alongside the exclusions, because the two together define your real protection. Watch for sub-limits, which cap particular items even when the overall sum insured is much larger — a room-rent cap in a health policy is a familiar example.
Deductibles
A deductible is the portion of each claim you pay yourself. Some are compulsory and written into the product; others are voluntary and chosen in exchange for a lower premium. If a claim is assessed at ₹40,000 and the deductible is ₹5,000, the insurer pays ₹35,000.
Our separate guide covers this in more depth: what is a deductible in insurance.
Exclusions
Exclusions are the situations the policy will not pay for. They are not fine-print trickery — they are how the price is kept reasonable — but they are the reason many claims are rejected. Typical examples include wear and tear, deliberate damage, losses during illegal activity, and conditions inside a waiting period.
Read the exclusions before the benefits. It is the fastest way to compare two policies honestly.
Policy period
The policy period is the window during which cover applies, printed on the policy schedule. A loss occurring outside those dates is not covered. Renewing on time matters for a second reason too: a lapse can reset accumulated benefits such as waiting-period credit or No Claim Bonus.
Claims
A claim is the formal request for payment after a covered event. Processes differ, but the shape is similar across products.
- Inform the insurer as soon as reasonably possible, within the notice period.
- Submit the claim form with supporting documents and identification.
- Allow inspection, surveying or medical assessment where required.
- Receive the settlement, a partial settlement, or a written reason for rejection.
Keep copies of everything — the policy schedule, bills, reports, photographs and correspondence. Good documentation is the single biggest factor in a smooth claim.
How to compare policies
- Compare on the same sum insured, otherwise the premiums are not comparable.
- Line up the exclusions, waiting periods, sub-limits and deductibles side by side.
- Check what the add-ons actually add, and whether you would use them.
- Look at the insurer's claim process, documentation and service network.
- Read the official policy wording rather than a marketing summary.
Terms, premiums, exclusions and eligibility vary between insurers and between products from the same insurer. This page is educational and is not a recommendation to buy any particular policy — see our disclaimer.