Medical indemnity insurance is a type of professional liability insurance that is primarily meant for medical practitioners and for medical establishments. Medical indemnity insurance which is also referred to as doctor’s professional liability insurance is specially designed to provide financial protection to medical practitioners against legal cost and compensation cost arising out of litigations when they get sued for medical malpractice, negligence or for mistakes.

Medical malpractice or negligence can be a result of an error in diagnosis, medical treatment or an aftercare service provided to the patient resulting in their health worsening or even their death. Some of the examples can be a failure to diagnose, unnecessary surgery, error in surgical procedures, premature discharge, improper care for the patient, misreading laboratory results, failure to recognise the symptoms and many more such negligent acts from a medical practitioner or from medical establishments can take away the life of patients. 

In such cases, the patient or his/her family has the right to hold the medical professional or establishment responsible for the loss or damage. In certain cases, the patient’s anxiety and limited knowledge may also lead to litigation against doctors. Medical indemnity insurance financially safeguards the medical professionals against these highly expensive litigations.

Additional Read: When does a claim occur under DPI and how to raise a claim?

Professional indemnity for doctors is a special coverage considering their unique need for insurance. According to a survey conducted in 2016, there has been a 400% rise in medico-legal cases in India out of which only 10% to 15% are genuine. But every case needs to be defended in the court of Law which involves exorbitant legal costs. If found guilty, compensation claims are extremely expensive. As customer awareness is increasing and society is becoming more litigious, it’s important for doctors to be legally and financially secured against the risk of litigation.

Doctor’s professional liability insurance policy coverage is designed based on the risk involved in the medical profession and the probability of occurrence of events which may lead to a legal case against the doctors or even hospitals. 

The coverage or sum insured in case of medical indemnity insurance is referred to as the limit of indemnity. The limit is fixed for each incident or an accident. This is referred to as AOA (Any One Accident) and AOY (Any One Year). The limit of indemnity or the coverage in Doctor’s indemnity insurance is expressed in terms of AOA: AOY ratio which generally ranges from 1:1 to 1:4.

With the rise in medical malpractices, negligence and mistakes, it’s important for medical practitioners and medical establishments to stay financially secured to face the litigation risks that may come on their way. Medical indemnity insurance policies are specially crafted by insurance companies considering the uncertainties in the amount of compensation to be paid in any medico-legal cases. Quantifying the amount of compensation in case of medical litigations is very difficult as it is based on the stress and medical trauma caused to the patients by the act of negligence, mistakes or medical malpractices.