Consumer insurance or general insurance is the largest category of insurance available in today’s insurance market. This means insurance coverage for people like you and me. The general insurance market is divided into two broad segments: general insurance and life insurance.
General insurance is divided into six broad categories: home, vehicle, income protection, public liability, personal accident and travel. Home insurance can cover an array of things, such as your physical home – for example, damage through storms, weather and accidents - and/or the content of your home – for example, against theft.
Every vehicle owner has some type of vehicle insurance, third party or comprehensive, covering against accidents, theft or injury. Income protection insurance normally is designed for home owners and covers against loss of wages due to redundancy or medical reasons. This type of policy will normally pay out a pre-determined sum over a number of months to cover such items are mortgages, loans or even living costs.
Public liability insurance is primarily aimed at businesses, protecting them against bodily injury and/or property damage against law suits brought by members of the public. For example, if you own a store and a customer slips and breaks their leg. Generally, the insurance policy would cover the costs of such an accident.
Personal accident insurance is relatively self-explanatory; it covers against accidents, either by paying for medical costs, injury to other people or even loss of income due to injury. Travel insurance covers travellers against a range of occurrences, such as accidents, theft, medical emergencies and so on. Although this list does not cover all the general insurance policies available on the market, these are the most common policies that are provided by insurance companies to consumers.
Within general insurance, the insurance coverage itself can be broadly divided into two categories: defined event and accidental loss. In defined event coverage, the insurance policy will cover a loss or damage from a list of ‘defined’ events that are agreed upon and listed in the insurance policy. For example, for home insurance this may include damage due to events such as lightening, fire, flood and so on. However, if a tornado destroys your home and it is not on the defined events list, you will not be covered. Therefore, it is important to consider which risks are most important for your coverage. If you live in a tornado prone area, you want tornados to be a defined event in your policy.
Under accidental loss or damage, the insurance company will compensate for loss or damage that occurs accidentally. For example, for travel insurance that could mean theft of your belongings. However, in most cases the insurance company will either cap the amount they will compensate and/or have exclusions in your insurance policy. Because of this, make sure you always read the insurance policy carefully, especially the fine print!