Doctors Professional Indemnity

What is the concept of AOA: AOY in Doctors Professional Indemnity Insurance?

In earlier days, doctors were considered noble as they healed people with their knowledge. In India there were very few cases where doctors were legally held responsible for a patient’s death. But gone are those days! With awareness rising among patients and their families, the relationship of doctors and patients has also changed with time. Indian laws have also become strict on matters of medical malpractice, breach of duty and negligence on the doctor’s part. Hence the risk of professional indemnity is also rising, where doctors are being held responsible for the advice they give and the duties they perform. Professional indemnity insurance for doctors 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 safeguards 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, surgeons etc. Medical establishments such as nursing homes, health centres and hospitals can also obtain medical professional indemnity insurance coverage to protect them from legal costs that may result from errors and omissions committed by any of the qualified professionals and their assistants associated with them. 

What does Doctors Professional Indemnity Insurance cover?

The scope of coverage offered under a doctors professional indemnity insurance plan varies from policy to policy depending on the policy terms and requirement of the insured. Generally the following coverages are offered under doctors’ professional indemnity insurance policy –

  • Cover for legal liabilities, that includes any compensation to be paid, the defence cost and expenses, investigation fees and cost of representation etc.
  • Coverage against claims arising out of death or injury caused due to negligence, errors 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 large. Quantifying the risk is a bigger challenge in these types of policies. However, the limits 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 understand 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. The insured can choose the predetermined limit of indemnity in various ratios of AOA (Any One Accident) and AOY (Any One Year). Doctors’ professional indemnity insurance policy premium 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 of any professional indemnity claim. If the ratio is 1:1, it denotes the maximum liability that the 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 a 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 a professional indemnity insurance plan with cover of INR. 8,00,000 having AOA: AOY ratio 1:2. He is held responsible for a 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 a 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, the liability amount beyond the limit needs 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. The limit needs to be set by carefully analysing the risk, requirements, benefits and cost involved.

With increased customer awareness, the judicial system is becoming more customer-friendly. With rising medico-legal cases, it becomes imperative to opt for protection measures to stay protected against various legal risks in the medical profession. 


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