IRDAI IC38 (Insurance Agent) General Insurance Products and Practice Syllabus

General Insurance Products and Practice syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for General Insurance Products and Practice in IRDAI IC38 (Insurance Agent), not a summary of it.

1. 1

   Principles Specific to General Insurance

   4 topics

   • Indemnity and the measurement of loss
   • Sum insured, market value and reinstatement value
   • Underinsurance and the condition of average
   • Excess, deductible and franchise
2. 2

   Fire and Property Insurance

   4 topics

   • Standard Fire and Special Perils Policy
     • Covered perils and exclusions
     • Add-on covers
   • Consequential loss (business interruption) insurance
   • Burglary and householder's package policies
   • Engineering and industrial all-risk covers
3. 3

   Motor and Marine Insurance

   3 topics

   • Motor insurance under the Motor Vehicles Act
     • Compulsory third-party liability cover
     • Comprehensive (own damage plus liability) policy
     • No Claim Bonus and depreciation
   • Marine cargo insurance
     • Institute Cargo Clauses A, B and C
     • Transit and warehouse-to-warehouse cover
   • Marine hull insurance
4. 4

   Liability and Miscellaneous Insurance

   5 topics

   • Public and product liability insurance
   • Professional indemnity and directors' and officers' liability
   • Workmen's compensation / employer's liability
   • Personal accident insurance
   • Rural and social-sector insurance products
     • Crop and cattle insurance
     • Government-sponsored micro-insurance schemes

General Insurance Products and Practice flashcards for IRDAI IC38 (Insurance Agent)

19 of 50 cards from the General Insurance Products and Practice deck — real questions with worked answers.

1. What is the principle of indemnity in general insurance?

   It ensures the insured is restored to the same financial position they were in just before the loss, no better and no worse. The insured cannot profit from a claim.

2. How is the measurement of loss (indemnity) calculated for partial loss of property?

   It is the cost of repair/replacement of the damaged part, less an allowance for depreciation (wear and tear), so the insured is restored to the pre-loss condition.

3. Define 'sum insured' in a property insurance policy.

   The maximum amount the insurer will pay under the policy; it represents the value of the property declared by the insured and is the basis for the premium.

4. What is 'market value' as a basis for settling a property claim?

   The replacement/reinstatement cost of the property less depreciation for age, use and wear and tear — i.e. the depreciated value at the time of loss.

5. What is 'reinstatement value' (new-for-old) cover?

   A basis of settlement where the claim is paid as the cost of replacing/reinstating the damaged property with new property of the same kind, without deduction for depreciation.

6. What is underinsurance?

   A situation where the sum insured is less than the actual value of the insured property at the time of loss, leaving the insured to bear a proportion of the loss.

7. State the condition of average (average clause) and its formula.

   If the property is underinsured, the claim is reduced proportionately. Claim payable = (Sum Insured / Actual Value) x Loss.

8. Using the average clause, if value is Rs 10,00,000, sum insured Rs 6,00,000 and loss Rs 2,00,000, what is payable?

   Rs 1,20,000. Claim = (6,00,000 / 10,00,000) x 2,00,000 = Rs 1,20,000.

9. What is an 'excess' (or deductible) in an insurance policy?

   A fixed amount the insured must bear out of every claim; the insurer pays only the loss above this amount. It eliminates small claims and reduces moral hazard.

10. Differentiate between a deductible and a franchise.

    With a deductible, the insurer pays the loss minus the deductible (insured always bears it). With a franchise, if the loss exceeds the franchise amount, the insurer pays the full loss; below it, the insurer pays nothing.

11. Under a franchise of Rs 5,000, what is paid on (a) a Rs 4,000 loss and (b) a Rs 12,000 loss?

    (a) Nothing — loss is below the franchise. (b) The full Rs 12,000 — once the loss exceeds the franchise, the whole loss is paid.

12. What is the Standard Fire and Special Perils (SFSP) Policy?

    The standard Indian fire policy covering buildings, plant, stock and contents against fire and a defined set of special perils on a single combined wording.

13. Name five perils typically covered under the Standard Fire and Special Perils Policy.

    Fire; lightning; explosion/implosion; aircraft damage; riot, strike and malicious damage; storm, cyclone, flood and inundation; impact damage; subsidence and landslide; bursting of water tanks/pipes (any five).

14. Name three exclusions under the Standard Fire and Special Perils Policy.

    War and warlike operations; nuclear perils; loss/damage to property by its own fermentation/spontaneous combustion; pollution unless caused by an insured peril; cash, bullion, deeds unless specifically covered (any applicable).

15. What does consequential loss (business interruption) insurance cover?

    The financial loss following a material damage event — loss of gross profit due to reduction in turnover and increased cost of working — during the period the business is disrupted.

16. Why must a business interruption (consequential loss) policy be supported by a material damage policy?

    BI claims are only payable if the underlying physical damage is covered and admitted under a material damage (e.g. fire) policy — the 'material damage proviso'.

17. Define 'indemnity period' in consequential loss insurance.

    The maximum period, beginning with the damage, during which the business results are affected and for which the insurer will indemnify the loss of gross profit.

18. What is 'gross profit' for the purpose of business interruption insurance?

    Net profit plus insured standing (fixed) charges; it is the value the policy seeks to protect against reduction in turnover.

19. What does a burglary insurance policy cover?

    Loss of or damage to property due to burglary or housebreaking — theft involving forcible and violent entry to or exit from the premises.

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