There are two types of insurance policy: indemnity insurance or non-indemnity.
What is indemnity?
This is a guarantee to provide security or protection from possible harm, damage or loss. As compensation for any loss or damage, a lump sum is agreed upon in the policy.
The following are the three main types of indemnity insurance.
1. Marine
2. Aviation is and
3. Other Indemnity Insurance
Marine insurance
This covers all vessels intended for aqua transport, on both marine and freshwater waters. This includes large commercial insurance on hulls and cargo, yachts, motorboats, and other small craft.
These are the areas that marine insurance covers:
· Hull insurance
· Cargo insurance
· Freight insurance
· Others such as insurance of liability
Marine insurance can be insured in a variety of policy types, including:
· Voyage policy
· Time policy
· Valued policy
· Un-valued policy
· Floating policy
Aviation insurance
This protects the hulls of the aircraft and third-party liability. It also limits liability to passengers. Although compensations or claims can often be very large, liability to passengers is limited under international conventions.
All of the policies and coverages for marine insurance are applicable to aviation industry.
Other indemnity insurance
These are as follows:
· Fire
· Theft and burglary
· Insurance of liability (including third party)
· Insurance of interest
· Consequential loss of profit
· Agricultural
· Bad debts
· Export credits, etc.
What is Non-Indemnity Insurance?
Indemnity and non-indemnity insurance are different. No amount of compensation will be able to compensate for emotional distress caused by the death, sickness, or personal accident.
This is the logic behind compensation.
Let’s look at it this way: Mr. Adam buys non-indemnity and, after years of paying the premiums faithfully, has an accident. He then dies. The sum-assured will be paid by the insurance company to Mr. Adam’s beneficiaries or his family. The money paid to Mr. Adam’s family will not bring back his love for his family. It can’t even redeem the emotional pain experienced by his loved one’s or compensate for Mr. Adam’s actions and presence.
If Mr. Adam loses any of his limbs, compensation cannot erase the pains he is experiencing from the limblessness or emotional imbalance that results from being physically handicapped. The insurance company will pay Mr. Adam “benefit” or “consolation payment in this instance.
Non-indemnity Insurance consists of both Life Insurance and non-life insurance.
Non-indemnity life insurance exists in three forms:
Whole life insurance,
Term Insurance,And
Endowment insurance
Non-indemnity Non-life Insurance policies exist in two forms of:
· Sickness
A non-indemnity non-life insurance policy is the insurance policy taken because of any eventuality of any form of sickness. Let’s assume Mr. Adam takes a non-indemnity non-life insurance and he suddenly falls sick. The insurance company will pay his medical bills?, some other compensation as covered in his insurance policy. This could include payment for lost remuneration, such as during sickness.
· Personal accident that causes death or disablement
You can also use an insurance policy to cover personal injuries. If a policy holder is involved in an accident that results in the loss of a limb, or death, the insurance company will pay out the insured amount to the beneficiary. In the event of an accident that results in the loss of limbs, the insurance company will pay the insured amount to the benefactor.
Accident insurance is not only for personal accidents, but also includes and can be sub-divided into the following:
· Burglary and ‘all-risks’
· Employer’s liability and public liability
· Contractors’ all-risks
· Motor
· Fidelity guarantee and contingency
· Livestock
· Glass
· Weather
· Engineering
· Travel, and so on.
