Classification of insurance:

The data collected from:

LINK: http://www.secp.gov.pk/ID/pub_id/pdf/InsuranceGuide09122010.pdf

GUIDE TO THE COMMON INSURANCE PRODUCTS

1.AUTO INSURANCE
Types of Insurance
There are three basic types of cover;
Comprehensive Insurance
This is the widest form of cover; the policyholder is protected against
financial losses of all kinds, accidental loss to vehicle, theft of car and third
party liability claims.
o Third Party Motor Vehicle Insurance
This cover protects the policyholder from all financial losses arising due to
accidental damage liability of all forms to third party, property damage or
bodily injury, death or both.
o Act only Liability Insurance
This cover meets the minimum legal insurance requirement. In this cover the
policyholder is protected against financial losses due to liability of accidental
bodily injury or death to third party
8.2. FIRE INSURANCE
Fire insurance is a form of property insurance which protects people from the
costs incurred by fires. When a structure is covered by fire insurance, the
insurance policy will pay out in the event that the structure is damaged or
destroyed by fire. Some standard property insurance policies include fire
insurance in their coverage, while in other cases, fire insurance may need to
be purchased separately. Property owners should check with their insurance
companies if they are not sure whether or not fire insurance is part of their
policies, and if fire insurance is not included, it should be purchased.
8.3 MARINE INSRURANCE
Marine Insurance covers the loss or damage of ships, cargo, terminals, and
any transport by which property is transferred, acquired, or held between the
points of origin and final destination. Marine also includes Onshore and

Offshore exposed property (container terminals, ports, oil platforms,

pipelines); Hull;
Marine Casualty; and Marine Liability.
Common Products Following products are commonly available from the
insurers:
o Marine Hull Coverage This policy covers losses / damages to the shell and
machinery of the vessel caused by maritime perils. This insurance policy may
cover the following perils,
Perils of the seas, rivers, lakes or other navigable waters,
Fire and explosion,
Violent theft by outside persons: Jettison or Piracy,
Contact with land conveyance, dock or harbor equipment or installation,
Earthquake, Volcanic eruption or lightning, Accidents in loading,
discharging or shifting cargo or fuel, Bursting of boilers, breakage of shafts
or any latent defect in the machinery or hull,
Negligence of Master Officers, Crew or Pilots,
Negligence of repairers or charterers,
Barratry of Master Officers or Crew Contact with aircrafts, helicopters or
similar objects, or objects falling there from,
Salvage charges when general average is declared.
o Marine Cargo
Coverage Marine Cargo coverage provides protection against losses or
damages pertaining to cargo / freight during transit by sea, air, road and rail.
The policy may provide all risks coverage as well as coverage for limited
risks depending upon the needs of the customers.
o Marine Umbrella
Coverage Marine Umbrella Liability is a broad spectrum cover offering
protection against liabilities to shipping / logistics and transport related
companies. This insurance could be of substantial benefit to Ship or vessel
Operators, Freight Forwarders, Road Transport Operators, NVOC, Railway
Operators, Carriers by Air, Ware house Depot operators, Ship agents, Brokers
and the services associated with Page 26 of 47 QUICK ADVICE Don't grudge
your time and shop around properly in order to find an appropriate health
insurance plan and health insurance coverage which will meet your health

care needs and your budget. shipping transportation, Terminal Operators,

Stevedores Operators, Operators of Container/Trailer, Storage and Repairers,
Port Harbors or Port Authorities.
8.4 MISCELLANEOUS INSURANCE
This class of insurance business encompasses various types of insurance
coverage including but not limited to the following: Cash Insurance The
cash policy is designed to cover Cash in Safe, Cash in Transit and Cash in
Counter. Fidelity Guarantee Insurance This policy covers misappropriation
or embezzlement committed by a permanent employee of the organization
during the course of his employment. Householder's Comprehensive

8.5 HEALTH INSURANCE

Health insurance is an inevitable part of modern life due to extremely
expensive medical care. However health insurance costs rise day by day and
the majority of the population still have neither health insurance nor any
other type of insurance.
Types of Health Insurance
There are three basic types of health insurance:
o Individual health insurance,
o Family health insurance and
o Group health insurance.

8.6 LIFE INSURANCE

Life insurance or life assurance is a contract between the Policyholder and
the insurer, where commonly the insurer agrees to pay to the nominated
beneficiary a sum of money upon the occurrence of the assured person(s)
death or any other defined event such as terminal illness or critical illness,
in return the policyholder agrees to periodically pay to insurer an appropriate
premium. The fundamental purpose of Life Assurance is to provide money
to meet financial losses caused by death, disability and illnesses. However,

Life Assurance policies may also provide investment benefits that is, money
payable on survival of the life assured rather than only on death.

Types of Life Insurance

All policies are not the same. Some give coverage for your lifetime and
others cover you or a specific number of years. Some build up cash values
and others do not. Some policies combine different kinds of insurance, and
others let you change from one kind of insurance to another. Some policies
may offer other benefits while you are still living. Your choice should be
based on your needs and what you can afford.

o Term Assurance
Term Insurance covers you for a term of one or more years. It pays a death
benefit only if you die in that term. Term insurance generally offers the
largest insurance protection for your premium. It does not build up a cash
value and the premiums are fully consumed up to the completion of term.
o Cash Value Life Insurance
Cash Value Life Insurance is a type of insurance where the premiums
charged are higher at the beginning than they would be for the same amount
of term insurance. The part of the premium that is not used for the cost of
insurance is invested by the company and builds up a cash value that may
be used in a variety of ways. You may borrow against a policys cash value by
taking a policy loan. If you dont pay back the loan and the interest on it, the
amount you owe will be subtracted from the benefits when you die, or from
the cash value. You can also use your cash value to keep insurance
protection for a limited time or to buy a reduced amount without having to
pay more premiums. You also can use the cash value to increase your
income in retirement or to help pay for needs such as a childs tuition
without canceling the policy. Cash value life insurance may be one of several
types; whole life, universal life and variable life are all types of cash value
insurance.
Whole Life Insurance

Whole Life Insurance covers you for as long as you live if your premiums are
paid. You generally pay the same amount in premiums for as long as you
live. When you first take out the policy, premiums can be higher than you
would pay initially for the same amount of term insurance. But they are
smaller than the premiums you would eventually pay if you were to keep
renewing a term policy until your later years.
Universal Life Insurance
Universal Life Insurance is a kind of flexible policy that lets you vary your
premium payments. You can also adjust the face amount of your coverage.
Increases may require proof that you qualify for the new death benefit. The
premiums you pay (less expense charges) go into a policy account that earns
profit. Charges are deducted from the account. If your yearly premium
payment plus the profit your account earns is less than the charges, your
account value will become lower. If it keeps dropping, eventually your
coverage will end. To prevent that, you may need to start making premium
payments, or increase your premium payments, or lower your death
benefits. Even if there is enough in your account to pay the premiums,
continuing to pay premiums yourself means that you build up more cash
value.
Variable Life Insurance
Variable Life Insurance is a kind of insurance where the death benefits and
cash values depend on the investment performance of one or more Page 31
of 47 separate accounts, which may be invested in mutual funds or other
investments allowed under the policy. Be sure to get the prospectus from the
company when buying this kind of policy and study it carefully. You will have
higher death benefits and cash value if the underlying investments do well.
Your benefits and cash value will be lower or may disappear if the
investments you chose didnt do as well as you expected. You may pay an
extra premium for a guaranteed death benefit.

INSURANCE COMPANIES
P a g e
3
1.
V
ehicle Insurance:
Auto insurance protects you against financial loss if you have an accident. It
is a contractbetween you and the insurance company. You agree to pay the

premium and the insurancecompany agrees to pay your losses as defined in

your policy. Auto insurance providesproperty, liability and medical
coverage:1. Property coverage pays for damage to or theft of your car.2.
L
iability coverage pays for your legal responsibility to others for bodily injury
or
propertydamage.3. Medical coverage pays for the cost of treating injuries, re
habilitation and sometimes lostwages and funeral expenses.
2
.
Health Insurance:
Medical and Health Insurance (MHI), is an insurance policy which is designed
to cover the cost of private medical treatment, which can be very expensive,
especially with hospitalisation and surgery.MHI also ensures that you won't
have to worry about the cost of seeking treatment duringemergencies. In
addition, MHI also provides you with an income stream while you undergo
treatment
Accident, Sickness and Unemployment Insurance
Disability insurance policies provide financial support in the event the polic
yholder is unable towork because of disabling illness or injury. It provides
monthly support to help pay such obligations asmortgages and credit
cards. Disability overhead insurance allows business owners to cover the o
verhead expenses of theirbusiness while they are unable to
work. Total permanent disability insurance provides benefits when a person
is permanently disabledand can no longer work in their profession, often
taken as an adjunct to life
insurance. Workers' compensation insurance replaces all or part of a worke
r's wages lost andaccompanying medical expenses incurred because of a
job-related injury.
Casualty insurance
Crime insurance is a form of casualty insurance that covers the policyhold
er against lossesarising from the criminal acts of third parties. For example, a
company can obtain crime insurance tocover losses arising from theft or
embezzlement.

INSURANCE COMPANIES
P a g e
4
Political risk insurance is a form of casualty insurance that can be taken ou
t by businesses withoperations in countries in which there is a risk that
revolution or other political conditions will result ina loss.
3
.
Home Insurance:
Home insurance provides compensation for damage or destruction of a home
from disasters. In somegeographical areas, the standard insurances exclude
certain types of disasters, such as flood andearthquakes that require
additional coverage. Maintenance-related problems are the
homeowners'responsibility. The policy may include inventory, or this can be
bought as a separate policy, especiallyfor people who rent housing. In some
countries, insurers offer a package which may include liabilityand legal
responsibility for injuries and property damage caused by members of the
household,including pets.
4
.
Property Insurance:
Property insurance provides protection against risks to property, such as
fire, theft or weatherdamage. This includes specialized forms of insurance
such as fire insurance, flood insurance,earthquake insurance, home
insurance, inland marine insurance or boiler
insurance. Builder's risk insurance insures against the risk of physical loss
or damage to property duringconstruction. Builder's risk insurance is
typically written on an "all risk" basis covering damage due toany cause
(including the negligence of the insured) not otherwise expressly excluded.
Builder's riskinsurance is coverage that protects a person's or organization's

insurable interest in materials, fixturesand/or equipment being used in the

construction or renovation of a building or structure should thoseitems
sustain physical loss or damage from a covered
cause. Crop insurance "Farmers use crop insurance to reduce or manage v
arious risks associated withgrowing crops. Such risks include crop loss or
damage caused by weather, hail, drought, frost damage,insects, or disease,
for
instance." Earthquake insurance is a form of property insurance that pays t
he policyholder in the event of an earthquake that causes damage to the
property. Most ordinary homeowners insurance policies donot cover
earthquake damage. Most earthquake insurance policies feature a high
deductible. Ratesdepend on location and the probability of an earthquake, as
well as the construction of the
home. Flood insurance protects against property loss due to flooding. Many
insurers in the U.S. do notprovide flood insurance in some portions of the
country. In response to this, the federal governmentcreated the National
Flood Insurance Program which serves as the insurer of last
resort. Marine insurance and marine cargo insurance cover the loss or dam
age of ships at sea or oninland waterways, and of the cargo that may be on
them. When the owner of the cargo and the carrierare separate corporations,
marine cargo insurance typically compensates the owner of cargo for
lossessustained from fire, shipwreck, etc., but excludes losses that can be
recovered from the carrier or thecarrier's insurance. Many marine insurance
underwriters will include "time element" coverage in such

INSURANCE COMPANIES
P a g e
5
policies, which extends the indemnity to cover loss of profit and
other business expenses attributableto the delay caused by a covered loss.
5
.

L
iability Insurance:
L
iability insurance is a very broad superset that covers legal claims against
the insured. Many types of insurance include an aspect of liability coverage.
For example, a homeowner's insurance policy willnormally include liability
coverage which protects the insured in the event of a claim brought
bysomeone who slips and falls on the property; automobile insurance also
includes an aspect of liabilityinsurance that indemnifies against the harm
that a crashing car can cause to others' lives, health, orproperty. The
protection offered by a liability insurance policy is twofold: a legal defense in
the eventof a lawsuit commenced against the policyholder and
indemnification (payment on behalf of theinsured) with respect to a
settlement or court verdict.
L
iability policies typically cover only thenegligence of the insured, and will not
apply to results of wilful or intentional acts by the
insured. Public liability insurance covers a business against claims should it
s operations injure a memberof the public or damage their property in some
way. Directors and officers liability insurance protects an organization (usu
ally a corporation) fromcosts associated with litigation resulting from
mistakes made by directors and officers for which theyare
liable. Professional liability insurance, also called professional indemnity ins
urance, protects insuredprofessionals such as architectural corporation and
medical practice against potential negligenceclaims made by their
patients/clients. Professional liability insurance may take on different
namesdepending on the profession.
6
.
Credit Insurance:
Credit insurance repays some or all of a loan when certain things happen to
the borrower such asunemployment, disability, or
death. Mortgage insurance insures the lender against default by the borrow
er. Mortgage insurance is aform of credit insurance, although the name
credit insurance more often is used to refer to policiesthat cover other kinds
of
debt. Many credit cards offer payment protection plans which are a form of
credit insurance.Other
types Collateral protection insurance or CPI insures property (primarily vehi
cles) held as collateral forloans made by lending
institutions. Financial loss insurance or Business Interruption Insurance prot
ects individuals and companiesagainst various financial risks. For example, a
business might purchase coverage to protect it from lossof sales if a fire in
a factory prevented it from carrying out its business for a time. Insurance
might alsocover the failure of a creditor to pay money it owes to the insured.

This type of insurance is frequentlyreferred to as "business interruption

insurance." Fidelity bonds and surety bonds are included in this

INSURANCE COMPANIES
P a g e
6
category, although these products provide a benefit to a third party (the
"obligee") in the event theinsured party (usually referred to as the "obligor")
fails to perform its obligations under a contract withthe obligee