Rural Insurance

Government Initiatives and Integrated Programmes 

Various programmes has been launched by the Government of India for the benefit of marginal farmers, small farmers, agricultural labourers, etc. Integrated Rural Development Programme (IRDP) have integrated these programmes since 1980 with the help of funding from the Central and State governments.

Objective of the Integrated Rural Development Programme (IRDP)  

The main objective of the programme is to make sure that the rural families involved are provided with working capital and assistance in the form of income generating assets, etc. Institutional credit, subsidy etc. will be offered for the same purpose. The beneficiaries of IRDP projects will be protected with the special insurance schemes. The policies come with reduced rates of premium and simplified procedures for claims.This ensures that development is coupled with financial protection for rural livelihoods. 

Various Kinds of Insurance for Rural Areas 

1. Vehicle Insurance: Provides protection for farm vehicles such as tractors, two-wheelers, trailers, and other automobiles used in rural areas. 

1. Home and Property Insurance: Offers coverage for rural homes, shops, small businesses, schools, and farming tools or machinery against damage or loss. 

1. Personal Accident Insurance: Gives financial support in case of accidental injuries, including partial or full disability, or even accidental death. 

1. Animal (Livestock) Insurance: Secures farmers against the loss of cattle like cows and buffaloes due to death or serious injury. 

1. Rural Health Insurance: Covers medical expenses and accidents, helping rural families get access to healthcare services. 

1. Poultry Insurance: Protects poultry farmers by covering chickens (broilers and parent birds) from disease, death, or other risks. 

How Does Rural Insurance Work? 

1. First, understand your needs and what kind of loss you might face (like damage to crops, cattle, or property) — this helps you choose the right insurance type. 

1. This also gives you a better idea of how much premium you may need to pay. 

1. Compare different insurance companies and their plans to find the most suitable and cost-effective option. 

1. The insurance company checks if the person applying for the insurance lives in a rural area. 

1. Based on the asset details (like livestock, house, etc.), the insurance company and the customer agree on a premium amount. 

1. If something goes wrong (like damage, death of cattle, accident, etc.), the insured must inform the bank or insurance company immediately. 

1. The insured then needs to submit proof of the event (like photos), a filled claim form, and an FIR if required. 

1. The bank or insurance company verifies all the submitted details. If everything is found to be true, the claim is approved, and the money is paid. If not, the claim is rejected. 

Eligibility of Rural Insurance:

According to the IRDA, Rural sector can only be defined as such only if it fills the following categories (according to the last census):

1. Has a population of less than 5000
2. The density of population in the area must not be more than 400 per square kilometre.
3. A minimum of 75% of the male working population must be engaged in agriculture related work.

Rural Policies:

The following can be insured under Rural insurance policies:

1. Sub-animals including honeybee, silkworm etc.
2. Livestock including sheep, cattle, goat, etc.
3. Property. For example agricultural pumpsets, etc.
4. Plantation and horticultural crops including grapes, rubber trees etc.
5. Persons. For example gramin accident.

Coverage:

Coverage for the policy includes the following:

Death due to:

• Accident due to lightning, fire, flood, storm, inundation, hurricane, cyclone, earthquake, tornado, tempest and famine.
• Cattle contracting diseases or disease occurring during the policy period.
• Riot and strike
• Surgical operations

Disability (PTD) may be covered if the policy holder opts to pay an extra premium:

• Permanent Total Disability, if in the case of Milch Cattle, for example, means the total and permanent incapacity to yield milk or conceive.
• Permanent Total Disability, if in the case of Stud Bulls, for example, means permanent inability to breed.
• Permanent Total Disability, if in the case of Calves / Heifers, Bullocks, and castrated male buffaloes, means the permanent and total inability of carrying out the use as mentioned in the proposal form.

Major Companies Providing Rural Insurance in India 

Rural insurance is created to meet the unique needs of people living in villages and small towns. Several well-known insurance companies in India offer these services, including: 

1. TATA AIG: Offers a range of insurance products tailored for rural customers. 

1. Aviva India: Provides rural insurance plans focusing on health, life, and agriculture-related needs. 

1. Cholamandalam: Known for offering insurance schemes for vehicles, property, and livestock in rural areas. 

1. Oriental Insurance: A government-owned company that offers a variety of rural insurance plans across India. 

1. IFFCO Tokio: Specializes in rural and agricultural insurance, supporting farmers and rural businesses. 

Exclusions

If it is found that the cattle has been through any of the following, then the insurer will not cover the cost:

• Overloading, wilful or malicious injury or neglect, unskilful treatment or not using the animals for the purpose that has been stated in the policy.
• Deliberate slaughter of the animal. This does not include cases where the animal is killed due to incurable suffering of the animal, in which case there must be a certificate from a qualified Veterinarian. This also does not include cases where the animal is slaughtered by the order of lawfully constituted authority.
• The animal will not be covered if it contracted a disease or was in an accident before the insurance period.
• Clandestine sale or theft of the insured animal will not be covered.
• Risks involved while transporting the animal by air and sea will not be covered.
• Pleuro-pneumonia if the insured cattle is in Sibasagar Districs of Assam or Lakimpur.

Special Conditions:

1. The insurer will not be liable to pay the claim if the animal died due to a disease which occurred within 15 days from the commencement of risk.
2. The ear tags must be surrendered to the company, without which the claim will not be entertained. It is the responsibility of the insured to make sure that the company is informed if a tag is lost and also to get the animal retagged.

Claim Procedure:

If the insured animal dies, the policy holder must immediately intimate the news to the insurer. He/ she must also provide the insurer with the duly-filled claim form, Death Certificate from a qualified veterinarian, Post-mortem examination report (if the company requires it), Ear Tag of the animal and also must make sure that the value of the animal has been established as required.

Claims are typically processed within 30 days, or up to 90 days in complex cases, as per IRDAI norms. 

Documents Needed to File an Insurance Claim 

To successfully claim insurance in rural policies, certain documents must be submitted to the insurance company. These may include: 

1. A properly filled claim application form 

1. A copy of the insurance policy for verification 

1. FIR report (only in cases involving accidents, theft, or vandalism) 

1. A death certificate, if the claim is related to the insured person’s death 

1. Proof of damage to tools, machinery, or property (for property insurance claims) 

1. Ear tag or identification number of the animal (in case of cattle or livestock insurance) 

1. A cancelled cheque or demand draft for the bank account where the claim amount should be deposited 

Sum Insured

The market value of cattle may differ according to the breed, time and area. A qualified veterinarian recommends the sum insured based on the particular animal's market value. Security of the animal is based on market value or sum insured, whichever is less. For scheme animals, the policy is issued as agreed value policy and claims are settled for 100% of sum insured.

Premium

The premium rates are higher for non-scheme animals than for scheme animals. This mainly includes crossbred/ indigenous animals. Exotic animals will be charged higher rates. Long-term discounts and group discounts are available. In case of adverse claims experience, there is a possibility of increasing the renewal premium.

Other policies that rural insurance have cover for:

• Farmers' package insurance
• Hut insurance
• Gramin personal accident insurance
• Animal-driven cart insurance
• Cycle rickshaw policy
• Lift irrigation insurance
• Failed-well insurance
• Agricultural pump set policy
• Horticulture / plantation insurance scheme
• Honey bee insurance
• Sericulture (silk worm) insurance
• Aqua culture (shrimp / prawn) insurance
• Poultry insurance
• Sheep and goat insurance
• Insurance cover is also available for the following types of animals:
  • Elephants
  • Pigs
  • Rabbits
  • Zoo and Circus animals and birds

Benefits of Purchasing Rural Insurance 

Spreading knowledge about rural insurance is important so that people in villages and remote areas can make use of these helpful schemes. Some key advantages include: 

1. Simple and easy-to-understand plans, designed especially for rural customers. 

1. Low premium amounts, making it affordable for people with limited income. 

1. Financial support during losses, as the plan covers specific risks like property damage, livestock loss, accidents, etc. 

1. Encourages self-reliance, helping rural families manage unexpected events without depending on others. 

GST of 18% is applicable on life insurance effective from the 1st of July, 2017