Professional indemnity insurance policies are insurance plans customised for doctors, chartered accountants, lawyers, engineers, and other professionals to protect them financially against legal expenses incurred due to ligation proceedings initiated against them by a customer.
They are also known as professional liability insurance plans and errors & omissions in the United States.
Doctors can benefit from these insurance policies as accidental errors and neglect might arise during healthcare delivery.
In such cases, such policies will cover the following situations –
- Claims from professional services.
- Libel and slander.
- Defence expenses.
- Loss of documents.
- Breach of confidentiality.
- 3rd party damages.
Importance of indemnity insurance plans for doctors
Doctors must choose the best professional indemnity insurance as legal cases continue to rise in India owing to the ease of filing litigations.
The medical negligence board received 112 cases between 2017 and 2019. The committee had resolved 102 cases within January. And even though only 16 cases were found to hold ground, doctors still run the risk of being financially damaged from the same.
Not being able to defend against such litigation can lead to the medical professional becoming blacklisted. Between 1966 and 2015, the Medical Council of India has blacklisted 149 doctors on accounts of medical negligence.
Hence, medical professionals must opt for an indemnity insurance policy, especially when they have their own clinic.
Other than such insurance policies which provide only financial coverage against certain situations, they can avail monetary assistance in the form of physician loans.
How does a professional indemnity insurance policy work?
An indemnity insurance cover works based on the limit set by the Any One Accident (AOA): Any One Year (AOY) ratio.
This ratio denotes the maximum liability that an insurance company will cover in case of legal action against the insured.
A 1:1 ratio means that the company will provide full coverage of the sum insured. On the other hand, a 1:2 ratio means that an insured will be able to claim coverage of up to half of the assured. The other half will be for another claim that arises during the same year.
For example, say a doctor has availed an indemnity insurance policy that provides coverage of Rs. 10 Lakh with an AOA: AOY ratio of 1:2.
Let’s consider the medical liability arising from a lawsuit is Rs. 6 Lakh. Here, the policy will only provide compensation of Rs. 5 Lakh – half of the sum assured of Rs. 10 Lakh.
The insured has to bear the other Rs. 1 Lakh. The other Rs. 5 Lakh of this policy will be provided in case of another legal suit within the same year.
Some insurance policies also come with deductibles, which is the limit up to which an insured has to cover the liabilities from his/her own funds.
For example, say a doctor has a liability of Rs. 5 Lakh and his/her policy comes with a deductible of Rs. 2 Lakh. In such cases, the compensation provided by the company will be Rs. 3 Lakh (Rs. 5 lakh – Rs. 2 Lakh).
Usually, indemnity insurance policies can offer coverage up to Rs. 1 Crore. Medical professionals can choose the sum insured based on their budget for the premium, practice size, and risks involved.
Doctors can face several risks if they do not opt for a professional indemnity insurance policy.
What is excluded from an indemnity insurance policy?
An indemnity insurance policy will not provide coverage if the claims arise from a few obvious cases –
- Criminal or illegal acts.
- Copyrights, trademark, or patent infringement.
- Healthcare offered under the influence of alcohol or narcotics.
- Insolvency or bankruptcy.
- Losses due to war, terrorism, etc.
- Damages caused deliberately or intentionally.
- Fraudulent claims.
Doctors must make sure they know all about a professional indemnity insurance policy before opting for one. Learning the features and coverage offered can help them to stay safeguarded from several liabilities.
NBFCs like Bajaj Finserv provide loan and financing for doctors that can help medical professionals meet any and every form of financial requirement.