The increased liability for professional services has opened the floodgates of “Professional Indemnity Insurance” in India. The term Professional indemnity insurance refers to a contract whereby one party is responsible for paying a predetermined amount called a premium in the event of a contingency or a specific event. Using it, a doctor can protect themselves and their clinic from uncertain events with any transaction risks.
Insurance Coverages for Professional Liability
- Based on a claim:
PI insurance takes care of any events that occur during the period of insurance, and claims can also be made when the policy is active. A retroactive date is a date when the insurance policy is intercepted, which becomes the permanent date the policy is in effect. When it is renewed each year, PI insurance remains on the same date.
- Based on occurrences:
The policy covers incidents within the policy’s coverage period regardless of when the claim is made. The PI insurance policy is divided into separate annual premiums for each year. Claims can be made regardless of whether the policy is in force. The policy should only be in force at the time alleged events occurred.
Therefore, occurrence-based insurance policies are typically more expensive than claim-based ones.
Why it’s important for doctors
Professional indemnity insurance covers doctors if they cause a client financial damage by breaching their professional obligations. Expenses incurred for defending the insured and damages awarded to the insured are included in the amount of an insurance claim. Unlike an instant loan for doctors, a policy of this nature outlines the various civil liability types that are eligible for coverage.
A doctor can also purchase a professional indemnity like an instant loan for doctors, which covers all of their employees against any claims. Before claiming the professional liability insurance, there must have been a loss or damage.
Professional indemnity insurance policies for doctors in India usually offer the following coverage options:
Endorsement by medical practitioners:
Bodily injury is included in this endorsement, so any form of bodily injury, mental distress, emotional distress, illness, or disease, including death, sustained by the insured while receiving medical treatment in the insured’s practice is covered.
Result of document loss:
In rendering professional services, the Insured may lose documents that they own or entrust to their custody. Due to the loss, the Insured is legally obligated to pay damages to the third party.
In the event of unintentional disclosure of confidential information, while providing professional services, this add-on cover will compensate you for that loss.
Defamation and Libel:
Libel and defamation claim is an add-on provides by most providers. It is a feature in your policy that lets you place a claim when you face libel, slander, or defamation from clients while you render professional services to them.
Employers can take advantage of this extension to protect their practice from damages caused by employees who commit fraud and or are dishonest about their credentials.
Coverage of legal representation costs:
If the Insured is subject to an inquiry, this extension in your policy will provide you with coverage for legal representation costs.
The average amount of Professional Indemnity insurance
In general, the following 2 limits are specified in a doctor’s professional indemnity insurance policy:
- Limitations on any one accident (AOA) and
- It is limited to one year (AOY).
There is a one-year limit:
It means that any One Year Limit, or AOY Limit, indicates the most that an insurance company will pay for any number of claims made during the Policy Period (usually one year). Depending on the ratio of AOA: AOY (1:1, 1:2, 1:3, or 1:4), the insured can choose either 1:4 or 1:2. Typically, most professional indemnity insurance policies cap the AOA limit at 25% of the annual limit, i.e., the ratio is 1:4.