Insurance has evolved as a process of safeguarding the interest of people from loss and uncertainty. It may be described as a social device to reduce or eliminate the risk of loss to life and property. The process of insurance has been evolved to safeguard the interests of people from uncertainty by providing certainty of payment at a given contingency.
Classify Insurance from Risk Point of View
(a) Personal Insurance –
Personal insurance includes insurance of human life which may suffer loss due to death, accident, and diseases. Therefore personal insurance is further sub-classified into life insurance, personal accident insurance, and health insurance.
(b) Property Insurance –
The property of an individual and of the society is insured against the loss of life and marine perils; the Crop is insured against an unexpected decline in production, unexpected death of the animals engaged in business, break-down of machines and theft of the property and goods. The risk may be fire or marine perils, theft of property or goods, damage to property at accident
(c) Liability Insurance
The liability insurance covers the risks of the third party, compensation, employees, liability of the automobile owners and reinsurance. This insurance is seen in the form of fidelity insurance, automobile insurance, and machine insurance, etc. Examples are– Third party insurance, Employees insurance, Reinsurance etc.
(d) Guarantee Insurance:
The guarantee insurance covers the loss arising due to dishonesty, disappearance, and disloyalty of the employer’s or second. The party must be a party of the contract. His failure causes loss to the first party. For example, in export insurance, the insurer will compensate the loss at the failure of the importers to pay the amount of dept.