As service providers, most professionals work at the risk of a lawsuit if they happen to make an error. As a doctor, chartered accountant or even an engineer, you cannot be one hundred percent sure about not making a mistake. As a professional in any industry, you get paid for the service you provide. So someone who avails that service reserves the right to question you if you fail to meet their expectation and drag you to court for it. That’s where having a professional indemnity insurance can come to your rescue.
A professional indemnity policy covers legal liability or payment of defence costs, fees and expenses in case the client files a case against the insured professional. So, different working professionals like doctors, surgeons, neurosurgeons, dentists, chartered accountants, engineers, architects, lawyers, and solicitors can avail such policy.
“The premium for each professional indemnity policy varies based on the profession and the sum insured. So, for instance, in case a surgeon wants to buy a professional indemnity policy for a cover of Rs. 50 lakhs, the premium would be in the range of Rs.5,000 - Rs.7,000," said Rakesh Goyal, director, Probus Insurance Broker Ltd.
Goyal said typically, all professions are covered but the insurance company along with their underwriting team may decide to not issue the policy for a specific profession. “The policyholder is covered against any financial loss due to a false advice, negligence, or any faulty analyses while the insurance policy is still active." Before you decide on the cover, it is important to understand the risk involved in your profession and the extent of jurisdiction you would want in terms of whether you would want to be covered only within India or abroad as well.
For professionals who are specialised and work on high-risk activities such as doctors performing critical surgeries, the premium could be higher. Another thing to keep in mind before buying a professional indemnity plan is to know that the cover is decided at two levels. In insurance terms, it is known as "any one accident" (AOA) or "any one year" (AOY)
AOA caps the amount you can claim from the insurer for a single incidence or accident. AOY, on the other hand, would pay for all accidents in a year, provided the claim does not exceed the sum insured. Usually you are required to decide the amount under both heads. However, if you choose a ratio of 1:1 between AOA and AOY, your premiums will be higher.
Note that a professional indemnity policy will not cover you if the act was deliberate and usually excludes any statutory fine or penalties that may have been levied on you. If you think you’re at the risk of a lawsuit because your work entails risk, it is advisable to buy a professional indemnity policy with adequate cover.