Say "insurance" and most people think of life and health cover. In fact there is another half of the insurance world, just as large: non-life (general) insurance, which looks after our property and our liability — from the car and the house to the suitcase. Here is a straightforward introduction.
What non-life insurance is, and how it differs from life insurance
Non-life insurance covers damage to property, liability towards others, and specific events, as opposed to life insurance, which is tied to a person's life and health. The structural differences worth knowing: most non-life insurance is a year-by-year contract — you pay an annual premium and renew — and it indemnifies actual loss within a limit, rather than paying a lump sum as life insurance does. The companies that underwrite it also hold a different licence from life insurers.
The main types you meet in everyday life
- Motor insurance — both the compulsory cover (Por Ror Bor) that the law requires for every vehicle, and voluntary cover (class 1, 2+, 3+ and so on) where you choose the level of protection.
- Fire and home insurance — covering the home against fire, lightning and natural perils subject to conditions. A house with a bank loan is usually required to carry fire insurance already.
- Travel insurance — accidents, medical costs abroad, flight delays and lost luggage, depending on the plan chosen.
- Personal accident (PA) insurance — paying benefits for injury, disability or death from an accident.
- Liability and business insurance — third-party liability, shop insurance, goods-in-transit cover, and so on, for business owners.
The principles to understand before buying
Non-life insurance works on the principle of indemnity — compensating actual loss — so there are details to read. The sum insured should be close to the asset's real value: set it too low and the loss may be reduced proportionally under the average clause, while setting it above the real value does not get you more than the loss. There is also the deductible, which you can choose in exchange for a lower premium, and each policy's specific exclusions, which should always be read before signing.
How to get full cover without paying twice
Work through the assets and risks that would hit you hardest. The house and the car usually come first, because their value is high and they involve liability towards other people. Then look at the risks of your lifestyle: frequent travellers should have travel insurance; business owners should look at liability cover. And check what you already have before buying more — some credit cards include travel insurance when the ticket is purchased on the card, and some workplaces already provide PA cover. Knowing what you have genuinely saves premium.
The whole picture: non-life + life = a complete protection plan
A good protection plan covers both halves. The life and health half looks after the person; the non-life half looks after property and liability. Miss either and a single event can reach your whole savings. Have a look at whether you have both halves today. If you would like your protection laid out in an organised overview, message us on LINE any time.
This article was inspired by material from the Thai Financial Planners Association (TFPA) and has been entirely rewritten.