Comparison Between The Concept of General Takaful And Family

Posted on September 10, 2011 by

Comparison between the concept of General Takaful and Family Takaful
Insuring anything other than human life is called general insurance. Examples are
insuring property like house and belongings against fire and theft or vehicles
against accidental damage or theft. Injury due to accident or hospitalization for
illness and surgery can also be insured. Liabilities to others arising out of the law
can also be insured and is compulsory in some cases like motor third party
insurance.
General Takaful also provides Muslims and non-Muslims (individuals and businesses)
an alternative to conventional insurance. Conventional insurance contravene the
Shariah principles with regard to the involvement of elements of riba, gharar and
maysir in their operations and investment activities.
General Takaful means takaful other than Family Takaful and also caters to the
diverse needs of the individual as well as businesses alike, offer protection for
losses such as those arising from Property Damage Cover, Marine Cover, Third Party
Liability Cover, Money Related covers, Workmen Compensation/Employers Liability
Cover or Infidelity of the employees.
As in the case of Family Takaful, General Takaful (non-life insurance) also works like
a joint guarantee in which all participants contribute their own shares of premiums
into a pool and mutually agree to indemnify those participants who suffer from an
insured peril.
This lesson will look at some of the aspects of General Takaful business and a range
of non-life protection plans offered in takaful.
General takaful schemes are risk-only contracts of joint-guarantee as compared to
investment-oriented nature of family takaful plans. These agreements are
essentially short-term in nature (normally one year), between groups of participants
to provide mutual compensation in the event of a defined loss. The schemes are
designed to meet the needs for protection of individuals and corporate bodies /
businesses in relation to material loss or damage resulting from a catastrophe or
disaster inflicted upon properties, assets or belongings of participants.
General Takaful and Family Takaful Business
The General Takaful Business is different from Family Takaful, as all the payments
are treated as only tabarru, and not divided into two separate accounts. For General
takaful business, the savings portion of contribution is nil and mudarabah fee would
be generated from managing a protection fund only to protect takaful policyholders
in case of insurer bankruptcy.

General Takaful (Takaful Non-life Insurance)

The General Takaful scheme is purely for mutual financial help on a short-term
basis, usually 12 months to compensate its participants for any material loss,
damage or destruction that any of them might suffer arising from an insured risk.
The various types of General Takaful plans provided by the Takaful Operators insure
risks that are the same in nature and purpose to these provided by conventional
general insurance products, for example:
Property: coverage for loss or damage by fire or lightning or other perils to the
property insured, including burglary, malicious damage, etc.
Motor: coverage for loss of or damage to motor vehicles available in the market
private car, private motorcycle and commercial vehicles, liability to third parties in
accidental collision.
Burglary: coverage for loss, destruction or damage by burglary, theft or breakin to
house or business property or any attempted thereat.
Personal Accident: coverage for bodily injury caused by violent, accidental,
external and visible means which injury shall solely and independently of any other
cause result in (i) death (ii) permanent disablement (iii) temporary disablement (iv)
medical expenses.
Workmen Compensation: coverage for liabilities of an employer who is legally
required to compensate an employee in case of personal injury by accident or
disease acquired by the employee in the participants immediate service arising out
of and in the course of employment.
Employers Liability: coverage for legal liability imposed on an employer to pay
damages to an employee injured at work by the employers negligence; this
coverage is considered part of workers compensation.
Professional Indemnity: coverage to businesses and professionals to protect
against negligence claims for negligent advice, designs or consultancy provided to
clients. Any negligence, deliberate or accidental, could lead to a claim against the
insured participant, causing serious damage to the business of the participant.
Marine, Aviation, Transit: coverage for loss of or damage to cargo whilst in transit
by Sea/Air and rail/road in case of Import/Export and inland transit. Also, cover for
damage to aircraft of hull of ships.
Machinery and Equipment: coverage for loss or damage to immobile industrial or
commercial equipment arising from fire and lightning; flood and water damage,
theft, break-in to premises, accidental external damage, etc.

 Business Interruption: coverage for loss of profit (consequential loss) during the
period in which a business has been interrupted (as a result of the fire or other
perils covered, machinery break-down, etc.).
Fidelity: coverage against loss by dishonesty or persons holding position of trust.
The policy indemnifies the Employer for loss of monies or goods as the result of any
act of fraud or dishonesty committed by any Employee whilst employed.
Money: coverage for businesses for loss of money by any cause while in transit
from one place to another, including money which may be carried by employees of
the participant. The policy also provides coverage for loss of money on premises
resulting burglary from locked safe or secured cabinet or a hold-up.
Public Liability: cover for accidental bodily injury to any person and / or accidental
loss of or damage to property caused in the course of business. Such coverage is
sold as a part of policies covering other risks, for example fire, personal accident,
workmen compensation and miscellaneous policies. A public liability policy covers
the participant against sums for which the participant shall become legally liable to
pay as compensation in respect of accidental bodily injury to third parties and
accidental damage to property of third parties. Etc.