12 Different Kinds of Insurance Policies| All You Need to Know

                          

Introduction the 12 Different Kinds of Insurance Policies are contained in this article. However, the policy can be defined as guiding principles or frameworks which help the insurance companies to meet up with their long-term plan. It is always stipulated in form of an article that can easily be accessed at any point. However, the 12 Different Kinds of Insurance Policies are well explained in this article.

Policies are generally adopted to propel the formulation of the organizational plan and ensure all the major decisions with regard to organizational growth are in order. We will go a long way to explain the 12 Different Kinds of Insurance Policies| All You Need to Know are contained in this article.

 12 Different Kinds of Insurance Policies

The policies can be of various types which are discussed in the following lines

1. Declaration Policy: The excess policy contributes to only a rateable proportion of the loss because if the amount of excess stock exceeds the sum set in the excess policy the business will not have a full cover owing to average condition. Moreover, if the first loss policy was also subject to the average condition the insured will be at loss. The declaration policy will give genuine protection in such a case where the stock fluctuates from time to time.

Under the declaration policy, the insured takes out insurance for the maximum amount that he considers would be at risk during the period of the policy. On a stipulated date of every month, the insured furnishes a declaration of the amount. The premium is usually paid to 75% of the annual premium amount. Practically, the annual premium is determined on the average of these declarations.

If eventually, the premium is higher than the provisional premium already paid, the insured has to pay the difference to the insurer. However, if the premium so calculated is lesser than the premium already paid, the excess is returned to the policyholder.

2. Specific Policy: A situation where an agreed sum is insured upon a particular property in case of a particular period, the whole of the actual loss is payable provided it does not exceed the insured amount. Here the value of the property insured has zero relevance in arriving at the measure of indemnity in a specified policy and the insured sum sets a limit up to which the loss can be made good.

3. Sprinkler Policy: This is one of the 12 Different Kinds of Insurance Policies that ensures the destruction or damage by water accidental discharge or leaking from automatic sprinkler installation in the insured premises. It is very important to note that the discharge or leakage of water due to heat caused by fire, repair or alteration of building or sprinkler installation, earthquake, war, or explosion are not covered by this policy.

4. Comprehensive Policy: This policy undertakes full protection only against the risk of fire but combines the risk of burglary, riot, civil commotion, theft, damage from pests, and lightning. The policy is also termed as ‘All in policies’. The comprehensive here does not mean that all type of risk is covered. there may be exclusion and limitations. This policy is beneficial to the insured and the insurer. This is because the insurer can get a higher premium and the insured is protected against losses due to several specified perils.

5. Valued Policy: Under this policy, the value of the item to be insured is ascertained at the beginning of the contract. The insurer remits the total admitted value irrespective of the then-market value of the properties. Its value is written on the face of the policy. m at the time of contract. The value is written on the face of the policy. In case of loss, the agreed amount will be paid. The measure of indemnity is, in consequence, not value at the time of fire, but a value agreed at the inception of the policy. The insurer pays the insured a fixed sum following the destruction of the insured property.

6. Valuable Policy: Here the amount of the claims is determined at the market price of the damaged property. Meanwhile, the amount of loss is not ascertained at the time of inception of risk but is determined at the time and place of loss.

7. Floating Policy: The floating policy occurs when a policy is taken to cover one or more kinds of goods shipped by someone in a defined location at one time under one sum assured for one premium and relation to the same owner. This policy is useful to cover fluctuating stocks in different localities.

8. Unvalued Policy: A policy is said to be unvalued when the average value of an insurance policy is not determined at the moment of taking the policy. At the moment of damage or loss, the actual value of the subject matter is ascertained.

9. Reinstatements Policy: This policy is issued to avoid the conflict of indemnity. In other kinds of policies, only the market value of the damage or loss is indemnified but, this policy undertakes to reinstate the insured property lost by fire to a new condition irrespective of its value at the time of loss.

10. Average Policy: This is the kind of policy containing an average clause. The actual amount of indemnity is determined with reference to the value of the property insured. If the policyholder has taken the policy for a lesser amount than the actual value of the property, the insured will be deemed to be his own insurer for the amount under insurance.

11. Escalation Policy: This gives way for an automatic regular increase in the actual amount insured all through the period of the policy in return for an additional premium to be paid in advance. It’s important to understand that escalation of policy amount shall not be above 25% of the sum assured. The additional premium payable in advance will be at 50% of the full rate. This policy is practically applicable to policies covering building, Machinery, and accessories only and will not apply to policies covering the stock.

12. Adjustable Policy: This policy is just an ordinary policy on the stock of a businessman with liberty to the insured to vary in his opinion, the premium is adjustable pro-rata according to the variation of the stock. The premium is calculated in an ordinary manner and is paid in full at the beginning of the policy.

       Conclusion

Basically, the 12 Different Kinds of Insurance Policies are generally adopted to propel the formulation of the organizational plan and ensure all the major decisions with regard to organizational growth are in order.

However, all the above-listed policies are such important that if their application in the daily insurance business is not properly handled it will negatively affect the business.  It provides proper guidance, accountability, efficiency, and flexibility on how an organization is being operated.