How is Doctors’ Professional Indemnity (Doctors PI) premium calculated?
A Doctor’s Professional Indemnity insurance policy covers the financial liability which doctors and medical practitioners face if they commit any negligence or errors in discharging their duties. In the case of doctors, human life is at stake. If there is any error or mistake, the patient might die, face severe physical injuries or become disabled. Due to such contingencies, doctors might be sued by the patient for their mistakes. In case of litigation, heavy expenses are involved. A doctor’s professional indemnity insurance policy takes care of these costs. It covers defence costs and also pays the required settlements to injured patients.
Premium for a doctor’s professional indemnity insurance policy is calculated taking into consideration the sum insured opted and the level of risk. Moreover, there are various other factors which determine the premium calculation. Here are the factors based on which the premium for a doctor’s professional indemnity insurance policy is calculated –
- Sum insured – the higher the sum insured opted by the policyholder, the higher would be the premium payable.
- Nature of practice – certain doctors who are specialised in their fields and handle high risk cases face higher risks than general physicians. So, premiums for a doctor’s professional indemnity policy taken for cardiologists, gynaecologists, oncologists, etc. would be higher than premiums for a policy taken on a general physician.
- Number of individuals covered – if a medical establishment buys a policy covering the medical practitioners working there, the premium would depend on the number of individuals covered under the policy. The higher the number of insured individuals, the higher would be the premium rate.
- Limits of indemnity and their ratio – a doctor’s professional indemnity insurance policy works on the concept of AOA: AOY limit. AOA is the maximum claim payable in any one accident while AOY is the total loss covered under the policy in a year. The limits selected and their ratio determines the premium payable.
- The size of the establishment – the size of the hospital or the clinic which is buying the policy also determines the premium. The larger the size of the establishment, the more risk it would tend to face and hence the higher would be the premium.
- Experience of the doctors – doctors learn with experience. That is why the risk of mistakes reduces if the doctor is experienced. The premium would, therefore, depend on the experience of the medical professional being covered. If the doctor is experienced, their premiums would be relatively low and vice-versa.
- Claim history – the past history of claims has a direct effect on the premiums. If there have been past claims, the premium charged would be higher.
- Deductible selected – every doctor’s professional indemnity insurance policy has a limit of the deductible. This deductible limit is the claim which is borne by the policyholder himself. If a relatively higher deductible limit is selected, the claim burden for the insurance company reduces and so the premiums are also reduced.
These are some of the most important factors which affect the premium charged by a doctor’s professional indemnity. The premium, therefore, is not uniform. It varies from policy to policy and is calculated taking into consideration the above-mentioned factors.
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