Published in Mint on, Jul 16 2013, Written by Kapil Mehta
Can I get fire insurance for my home even before construction is completed?
—Avinash
You can buy a contractor’s all-risk policy that will cover you for material damage and third-party liability. Material damage includes loss due to fire, floods, malicious damage or earthquake. It can cover damage to your home as well as surrounding properties.
Third-party liability covers the legal costs and claims if a worker or any other third party gets injured or dies on your property. This cover will cost you about Rs.2.5 per Rs.1,000 of sum assured. So if your construction has a value of Rs.1 crore, then the insurance will cost Rs.25,000 per year.
I am a doctor and want to know if there is any insurance cover for professional errors. Please give me the details.
—Rahul Pandey
You should buy a doctor’s professional indemnity cover. This will cover malpractice suits or legal liabilities of practice. There are four factors to consider for such covers.
First, what is the extent of sum assured you need? A surgeon practising in upmarket hospitals needs at least Rs.1 crore. The liability exposure of non-surgical specialities such as paediatrics, psychiatry, radiology or medicine can be Rs.20-50 lakh.
Second, what is the any one accident (AoA) to any one year (AoY) ratio. A ratio of 1:2 implies that for any specific litigation, the maximum claim payable is half the sum insured. I would recommend that you avoid these restrictions and opt for a 1:1 ratio, where the entire sum assured can be claimed for any incident.
Third, make sure that the retroactive date is clearly specified. This is the date when you first took out the insurance. For example, if you first bought the insurance on 1 March 2010 and have renewed every year, then this date is your retroactive date. The insurer should cover all incidents that take place any time after the retroactive date if you have renewed the policy each year. So if there is a malpractice suit in 2013 for a surgery performed in 2011, it should get covered. This is really an important requirement and so many of my doctor friends have missed out on this benefit because they forgot to renew the policy in time.
Fourth, you will find it easiest to buy this insurance from public sector insurers. Their rates are standardized and lower.
Broadly speaking, Rs.10 lakh of sum assured will cost Rs.4,000 for plastic surgeons, Rs.3,000 for a dentist, Rs.1,500 for a diagnostic laboratory and Rs.1,000 for a radiologist or physician.
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Construction All Risk
