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A tertiary level of protection against the outcome of litigation would be to go for insurance cover. Professional Indemnity Insurance cover became available for doctors and medical establishments only recently, i.e. from December 1991.
The term "indemnity" means reimbursement, to compensate. The principle of indemnity is strictly observed in liability insurances. These insurances (e.g., Professional Indemnity Insurance) are designed to provide the insured person protection against the financial consequences of legal liability. If the insured is legally liable to pay damages to others, the policy will indemnify them subject to the terms, conditions and limitations of the contract. Indemnity is also available in respect of legal costs awarded against the insured, as well as legal costs and expenses incurred by the insured with the written consent of the insurers in the defence of settlement of claims.
This policy is meant for professionals / medical establishments to cover liability falling on them as a result of errors and omissions committed while rendering professional service.
The policy offers a benefit of retroactive period on continuous renewal, whereby claims reported in a subsequent renewal but pertaining to an earlier period after first inception of the policy also become payable.
The policy covers all sums which the insured professional becomes legally liable to pay as damages to a third party in respect of any error and/or omission committed whilst rendering professional service. Legal cost and expenses incurred in defence of the case, with the insurer's prior consent, are also payable, subject to the overall limit of indemnity selected.
Only civil liability claims are covered. Any liability arising out of a criminal act, or an act committed in violation of any law or ordinance, is not covered.
The policy is meant for the following groups of professionals:
In a Professional Indemnity Policy, the sum insured is referred to as the Limit of Indemnity, fixed per accident (Any One Accident, AOA) and per policy period (Any One Year, AOY). The ratio of AOA to AOY can be chosen from 1:1, 1:2, 1:3 or 1:4.
The AOA limit — the maximum amount payable per accident — should be fixed considering the nature of the insured's activity, the maximum number of people who could be affected, and the maximum property damage possible in the worst-case accident.
"Legal liability" means responsibilities enforceable by law, classified as Criminal or Civil Liability. Only Civil Liability claims are payable, arising where there is prima facie evidence of negligence resulting in injury/death to a third party or property damage, proven only when duty of care, breach of duty, and resulting injury/damage are all established.
In case of an event likely to give rise to a liability claim, the insurance company should be informed immediately; any legal notice or summons received should be sent to the company, which has the option to arrange the defence of the case.
The maximum amount payable, including defence cost, is the AOA limit selected; the AOY limit reduces by the amount of claim/indemnity paid for each accident, and any number of claims during the policy period are covered subject to the total not exceeding the AOY limit.
The policy will not pay for claims arising from contractual liability, intentional non-compliance with a statutory provision, loss of goodwill, slander, fines, penalties, libel, false arrest, defamation, mental injury, etc.
Salient features and terms and conditions of Professional Indemnity insurance policies, as provided by the General Insurance Corporation of India, are given below.
Check the membership tariff table for medical establishments.