Let me begin by clarifying that General Insurance is different from Life Insurance. Here I am writing about General Insurance. Life Insurance covers individuals whereas General Insurance covers all material things in Industry and business including motor cars of individuals.
Coming to General Insurance almost all companies big and small get their assets covered with a General Insurance company. In addition these companies cover their moving cargo under transit insurance by Road, Sea and Air. The insurance cover under transit insurance can be under consignment to consignment basis or under open category covering a period of one year. The insurance premium is paid depending upon the value declared by the insured on the cargo in transit. If it is an open policy then the insured has to declare the approximate value in transit per year to the insurance company.
The General Insurance covers all aspects of damage such as fire, floods, accidents, motor cars and now even terrorism is included in the list.
What are the assets covered under general insurance? The assets covered are buildings, roads, motor cars, machinery, finished goods, materials for input into production, raw materials and work in process.
I have already mentioned above the type of damages due to various places. Now, I am giving an item wise picture of how it is done. First, in case of damage to machinery the surveyor deployed by the insurance company (who is normally an engineer) assesses the damage. His assessment is based on the condition of machinery when it was working before the peril has occurred and the cost of replacement of the machinery to the insured. The surveyor then makes a comprehensive report and sends it to the insurance company. He is also authorized to talk to the insured and settle the claims. Then, the whole report is sent to the insurance company for making the payment of damages to the insured.
Now there are different types of tricky damages. Cases may have arrived apparently in good condition by sea, road and air but after opening them the goods may be found with damages. In this case the insured may get it surveyed by the Insurance company and a report is prepared to be sent as a claim to the appropriate transporter. Road, sea or air transporters may also get the damaged goods surveyed by the Insurance company before settling the claims. The report of the survey has to be supported with photographs showing the damaged goods and the case in which it is opened.
At times an entire plant is burnt out or damaged by floods. It becomes difficult for the surveyor deployed by the Insurance company to assess the damage value. In this case he first collects the information on the machinery when it was purchased and allow for the depreciation rate. If this is not feasible then he will obtain the present value of the new machinery and suitably apply the depreciation. If this is not possible then he will ascertain the value of identical machinery and apply the allowed depreciation to arrive at the damage value.
Normally the insured claims the value if the loss is substantial. The surveyor has to support his comprehensive report with photographs describing each photograph and showing the damages with a marker pen on the photograph.
With regards to the Insurance premium it is not renewable and every year they assess the value, and accordingly the insured has to pay the premium. This is an allowable expenditure in the balance sheet of the company.
Normally the surveyor is an engineer and not an employee of the company. He has to pass the IRDA examination. All insurance companies are governed by IRDA rules and procedure. This applies to Life insurance also. The general insurance company may have a few employees on their rolls for undertaking surveys on emergency basis or special cases. Otherwise for all other parties the survey is undertaken by an external survey.
The surveyor report has to be made in a particular type of format. This has to contain the company background, turnover, the product they are manufacturing and some general details. The format has to spell out how can an accident happen leading to damages so as to determine whether the insured has made any mistake in the standard operating procedure. The surveyor must clearly give out his reasons on how the damages occur and finally the value of the damages.