What is the concept of AOA: AOY in Doctors Professional Indemnity Insurance?
Earlier days, doctors were considered to be the second god on earth as they heal many lives with their knowledge. Specifically, in India, there were hardly any cases where doctors were legally held responsible for patients’ death. But, gone are the days when doctors were referred to as god! With more and more awareness, relationship of doctors and patients is also changing with time. Law is growing strong in India on medical malpractice, breach of duties and negligence on the doctor’s part. With this, the risk of professional indemnity is also rising where doctors are being held responsible for the advice they give and duties they perform. Professional indemnity insurance is the primary solution for doctors to stay protected against such risks.
What is Doctors Professional Indemnity Insurance?
Doctor’s or healthcare professional indemnity insurance is an insurance plan that safeguard doctors against legal costs, defence expenses and financial damage when they are accused of medical negligence and for providing inadequate advice. Basically, the policy is meant to cover the legal liability of doctors that may arise due to omissions and errors committed by them while rendering their professional services.
The policy can be purchased by any qualified and registered medical practitioners like general physicians, cardiologists and surgeons etc. Medical establishments such as nursing homes, health centres and hospitals etc. can also seek professional indemnity insurance coverage to protect them from legal costs that may result from errors and omissions committed by any qualified professionals and assistants associated with them. Click here to know more on how professional indemnity insurance can protect doctors against legal liabilities.
What does Doctors Professional Indemnity Insurance cover?
Scope of coverage offered under doctors professional indemnity insurance plan varies from policy to policy depending on the policy terms and requirement of insured. Generally, the following coverages are offered under doctors’ professional indemnity insurance policy –
- Cover for legal liabilities that includes compensation to be paid, defence cost and expenses, investigation fees and cost of representation etc.
- Coverage against claims arising out of death or injury caused due to negligence, error and omissions.
It’s quite difficult to set the limit indemnity in doctors’ medical malpractice insurance policies. Sometimes, monetary compensations expected by patients can be really big. Quantifying the risk a bigger challenge in these types of policies. However, the limit of indemnity in doctors professional indemnity insurance policies are set based on the exposure. There are two limits of indemnity based on per accident, per policy period which is called AOA (Any One Accident) and AOY (Any One Year) respectively. The limit can be set in a ratio of these two limits. Let’s under the concept of AOA (Any One Accident) and AOY (Any One Year) in detail.
Concept of AOA (Any One Accident): AOY (Any One Year)
AOA refers to any one accident, which means the AOA limit is set for one or more or the series of claims that may arise due to the same error and omission in professional services rendered by the insured. AOY refers to any one year of the insurance policy. Insured can choose the predetermined limit of indemnity in various ratios of AOA (Any One Accident) and AOY (Any One Year). Premium for any doctors’ professional indemnity insurance policy can be determined based on the AOY (Any One Year) limit chosen. Generally, insured can choose to set the limit of indemnity in AOA (Any One Accident): AOY (Any One Year) ratio of 1:1, 1:2, 1:3 and 1:4.
Basically, AOA (Any One Accident): AOY (Any One Year) ratio determines the maximum liability that the insurance company will compensate for in case event of any professional indemnity claim. If the ratio is 1:1, it denotes the maximum liability that insurance company will compensate for is equal to the amount of sum assured chosen. If the ratio is 1:2, that means the maximum liability the insurance company will compensate for in the event of claim will be equivalent to half the sum assured chosen. The other half of the sum assured will be paid for the second claim case during the same policy period. Let’s understand this with an example.
Let’s say a cardiologist has purchased professional indemnity insurance plan with cover of INR. 8, 00,000 having AOA: AOY ratio 1:2. He gets held responsible for death case with a charge of INR. 5, 00,000. In this case, the insurance company will only compensate for INR. 4, 00,000 (1/2 of INR. 8, 00,000). The remaining INR. 1, 00,000 needs to be paid by cardiologist out of his pocket as the other half of the sum assured is paid only for the second incident in the same policy period.
Hence, the limit of indemnity needs to be carefully chosen depending on the risk exposure. If the legal liability is more than the policy limit, liability amount beyond the limit need to be borne by the insured doctor or medical establishment. While choosing the limit of indemnity, every medical practitioner must consider his/her clientele spread, probability of claims and other risk exposures. Limit needs to be set with carefully analysing the risk, requirements, benefits and cost involved.
With increased customer awareness, judicial system is becoming more customer-friendly. With the rising medico-legal cases, it becomes imperative to opt for protection measures to stay protected against various legal risks in medical profession. Click here to buy the right doctors professional indemnity insurance policy.