Doctors Professional Indemnity

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What is the concept of AOA:AOY in Doctor’s Professional Indemnity Insurance?

The medical profession is considered a noble one. However, there have been cases of patients and relatives accusing doctors of medical negligence and misdiagnosis.

Meanwhile, Indian laws have become stringent on matters of medical malpractice, breach of duty and negligence. Hence, the risk of professional indemnity is rising. With doctors being held responsible for the diagnosis and the treatment, the risk of professional indemnity is also rising.  Professional indemnity insurance is the primary solution to protect doctors against such risks.

What is Doctor’s Professional Indemnity Insurance?

Doctor’s professional indemnity insurance safeguards medical professionals against legal costs and financial damages.

Meanwhile, the policy also covers doctors against liabilities that may arise due to omissions and errors while treating patients.

Any qualified and registered medical practitioner like a general physician, cardiologist or a surgeon can procure this policy.

Moreover, medical establishments such as nursing homes, health centres and hospitals can also obtain this insurance. In case of a negligence claim, this policy will cover legal costs for these institutions.

What does Doctor’s Professional Indemnity Insurance cover?

The scope of coverage offered under this insurance varies from policy to policy and depends on the terms and requirement of the insured. The policy thus covers defence cost, investigation fees and the cost of representation.

It also provides coverage against claims arising out of death or injury caused due to a doctor’s negligence, errors and omissions.

It’s difficult to set the limit in doctor’s medical malpractice insurance policies. In some cases, patients expect hefty monetary compensations.

Quantifying the risk is a bigger challenge in these policies. There are two limits of indemnity based on the ratios of AOA (Any One Accident) and AOY (Any One Year) respectively. The ratio of these two limits determines the coverage limit. Let’s understand the concepts of AOA and AOY.

The concept of AOA (Any One Accident): AOY (Any One Year) in Doctor’s Professional Indemnity

AOA refers to Any One Accident. This means the AOA limit is set for one or more or a series of claims. AOY refers to Any One Year of the insurance policy.

The insured can choose the predetermined limit of indemnity in various ratios of AOA and AOY.

The doctor’s professional indemnity insurance policy premium is determined as per the AOY limit. The insured can choose to set the limit of indemnity in the AOA:AOY ratio of 1:1, 1:2, 1:3 and 1:4.

The ratio determines the maximum liability in any one incident that an insurance company will compensate for. The 1:1 ratio means the maximum liability and the sum assured are equal. Meanwhile, the 1:2 ratio means the maximum compensation liable will be equivalent to half the sum assured. Any other claim made during the same policy period will get the other half

Let’s say a cardiologist has purchased a professional indemnity insurance plan with a cover of Rs 8,00,000 at an AOA:AOY ratio of 1:2. The specialist informs the insurer he needs to pay Rs 5,00,000 damages as he has been held responsible for a patient’s death.

The insurance company, however, says it will compensate only Rs 4,00,000. The cardiologist is supposed to pay the remaining amount as the other half of the sum assured is meant for any other claim that may arise during the policy period.

Hence, the risks involved will determine the limit of indemnity. If the legal liability is more than the policy limit, then the insured has to bear the excess amount.

Fixing the indemnity limit

While choosing the indemnity limit, every medical practitioner must consider his/her clientele, probability of claims and other risk exposures. The risk, requirements, benefits and cost involved determine the limit. If in doubt opt for the 1:1 ratio. This may be slightly more expensive but you will not have any surprises if you file a claim.

The judicial system has been more patient-friendly, thanks to the increased awareness. With an increasing number of medico-legal cases, it has become imperative for doctors to stay covered against the legal risks of the medical profession.

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