Medical Indemnity Insurance
  • Safeguards your Medical Profession
  • Covers Legal Costs & Expenses
  • Provides Compensation to the Patients
Medical Indemnity Insurance
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Professional Indemnity Insurance

Professional indemnity is an insurance policy solely created for a business or a working professional, providing services or advisory to its customers and clients. These plans help in recovering costs that arise due to third-party losses i.e. a loss to the client or the customer. For example, if the customer of the insured company faces a financial loss due to the services provided by the company then in this case the insured company will be protected by a professional indemnity plan. After the occurrence of loss, the costs are borne by the insurance company.

What is Medical Indemnity Insurance?

Medical Indemnity Insurance is a type of insurance that is designed to safeguard medical practitioners like doctors, nurses or surgeons from legal claims. In simple words, this policy liberates you from all the risks and liabilities that may arise while performing surgery or any medical-related activity.

To understand Medical Indemnity Insurance, let's take an example of one of the most popular Bollywood movies- Good Newz, where two married couples were unsuccessful in conceiving and tried seeking medical help for the same. However, they had ended up in a complicated situation due to the blunder made by their doctor.

In such a situation, where the patient faces any such issues due to the doctor's or hospital's unintended mistakes, he/she can file a claim, and the authorities are liable to pay him/ her the compensation.

In short, Medical Indemnity Insurance provides coverage in the below-mentioned cases:

  • If a patient or any third-party files a claim for any injury or harm
  • Legal costs and expenses in defending the claim
  • If compensation is payable to the patient

How Professional Indemnity Insurance Works?

Let’s understand how Indemnity Insurance works through the following points.

  • Identify the Risk The business and the Professionals measure their level of risk , which includes errors, omissions, negligence, malpractice, or breaches of professional duty.
  • Purchasing The Policy The business or the professional purchase the professional indemnity insurance cover that best suits their requirements.
  • Policy Coverage The claims are covered only when there is a third party loss occurred within the policy term. The policy might also have a retroactive date, which would offer coverage for events that had taken place within a certain time range but before the policy was activated.
  • Claim Evaluation The insurance provider assesses the claim and will review the documents which are related to the incidents and then the claims are accepted.
  • Defence and Settlement If the claims are found to be valid the insurance company provide legal defence to the insured, this may include hiring lawyers, negotiating settlements, or representing the insured in court.
  • Indemnification If the insured wins the court judgment, the insurance provider will cover the indemnification by paying the financial compensation, agreed-upon and up to the policy's limits.
  • Premiums Professional indemnity insurance policy premiums are decided by the insurance companies by considering the level of risk, coverage limit and the claims history of the business or the professional. The companies also provide deductibles on these policies
  • Continuous Coverage To ensure continuous protection, professionals or businesses must renew their indemnity policy in health insurance before it expires.

Who can Take the Indemnity Policy in health insurance?

Lets us examine the list of business or professionals who need professional indemnity insurance:

Professionals/Establishments Entity
Doctors and medical practitioners Physicians
Engineers Architects
Interior decorators
Medical Establishments Hospitals
Nursing Homes
Lawyers Advocates
Accountants Chartered Accountant
Management Accountants
Financial Accountants
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Why is Medical Indemnity Insurance important?

As a doctor or any medical professional, it is your duty to treat your patients with utmost dedication. However, at times, in some circumstances, there is always the possibility that you or one of your team members could make a mistake unintentionally, which could create trouble. So purchasing indemnity insurance for doctors is a wise decision.

In such scenarios, if the claim is made against you, your goodwill and your financial position could be left vulnerable.

To avoid such situations in the future, it is important to guard against the risk of legal action against you in advance with a Medical Indemnity Insurance plan. Such plans act as the safety net that will protect you from such severe actions by covering claims made against you.

Benefits of professional indemnity insurance policy

Following are some of the key benefits of this type of insurance:

  • Financial Protection: Indemnity health insurance safeguards the business or professionals from financial loss that is caused by professional errors or omissions or delays in service to the client.
  • Legal Protection: Professional indemnity insurance offers legal protection to the insured from the client’s litigation, by providing them attorney and legal guidance if needed.
  • Settlement The insurance provider will cover the indemnification by paying all the financial compensation that the company has agreed upon. This will relieve the financial burden of the insured. For example, if a business made a huge loss by providing a delayed service to the client, the company will pay for the loss, after the verification of the document.

Who Is Eligible to Get Coverage under Medical Indemnity Insurance?

Medical Indemnity Insurance is a cover relevant to all Healthcare Providers, including:

  • Medical Practitioners such as physicians, surgeons, cardiologists, pathologists etc.
  • Individual practitioners
  • Obstetric scanning
  • Aesthetic cosmetic practitioners
  • Mental Health clinics
  • Medical staff suppliers

What does Professional Indemnity Insurance Cover?

Here are a few inclusions of the indemnity policy in health insurance:

  • Claims that arise due to professional negligence.
  • Claims raised due to errors, omissions, or mistakes or delays in professional services.
  • Claims made due to a breach of professional duty or fiduciary responsibility.
  • Defence costs, including legal fees such as lawyers fees.
  • Indemnification for settlements or judgments against the insured.

What Does Professional Indemnity Insurance Not Cover?

It is very crucial to read the policy document before purchasing a professional indemnity insurance policy. Here are a few exclusions of the policy:

  • Claims made from intentional or fraudulent acts.
  • Claims that are related to criminal acts or illegal activities.
  • Claims that arise from bodily injury or property damage.
  • Claims for losses covered under other insurance policies.
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Claim Process

  1. Inform Your Insurer

    First thing first, inform your Insurer immediately of all the available details.

  2. Submit all the relevant documents

    Submit all the documents related to the case along with the legal notice or summon, if any.

  3. Claim Settlement

    Your Insurance Company will thoroughly look into the matter and arrange for the defence of the particular case, whenever required.

Medical Indemnity Insurance:FAQ's

1. How much Sum Insured is enough for Medical Indemnity Insurance?

Before choosing your ideal Medical Indemnity cover, you must ensure to cautiously evaluate the risk involved in your profession. Therefore, one must always select the sum insured that will cover any legal compulsion that you may have to face at any point of time.

2. Does a Medical Indemnity plan offer coverage if the patient makes false acquisitions?

Yes, in case a patient makes any false acquisitions against the doctor, the plan offers coverage to the doctor and also covers the expenses incurred in defending the claim.

3. Is Medical Indemnity compulsory?

No, it is not mandatory for doctors to buy Medical Indemnity Insurance. However, considering the nature of the risk of the medical profession, it is recommended to opt for a Medical Indemnity Plan.

4. What is the limit of indemnity applicable under the policy?

The Sum Insured of Medical Indemnity plans is based on the limit of indemnity. The limits are:

  • Any One Accident (AOA): limit applicable for a single incident. It is the maximum payable amount during a claim
  • Any One Year (AOY): limit applicable for the policy period

Ratio of the limit can be chosen as the below-mentioned details-

  • 1:1
  • 1:2
  • 1:3
  • 1:4

Summing it up

In today's world, unwanted claims can cause a significant threat to the financial security for a medical practitioner. In such a situation, having Medical Indemnity Insurance is nothing less than a blessing. This plan secures you from the claims caused by unintended negligence or any accidents.

5. Why is medical indemnity insurance for doctors necessary?

Professional indemnity insurance for doctors is important because it will provide financial security and legal security to the doctors.

6. How does professional indemnity insurance cover the insured legally?

The insurance company offers the insured lawyers and suitable legal counsel to ensure their legal protection

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Naval Goel

Reviewed By: Naval Goel

Naval Goel is the CEO & founder of Naval has an expertise in the insurance sector and has professional experience of more than a decade in the Industry and has worked in companies like AIG, New York doing valuation of insurance subsidiaries. He is also an Associate Member of the Indian Institute of Insurance, Pune. He has been authorized by IRDAI to act as a Principal Officer of Insurance Web Aggregator.