HIGHLIGHTS:
This policy is meant
for professionals to cover liability falling on them as a result of errors and
omissions committed by them whilst rendering professional service. The policy offers a
benefit of Retroactive period on continuous renewal of policy whereby claims
reported in subsequent renewal but pertaining to earlier period after first
inception of the policy, also become payable. Group policies can
also be issued covering members of one profession. Group discount in premium is
available depending upon the number of members covered.
The policy covers all
sums which the insured professional becomes legally liable to pay as damages to
third party in respect of any error and/or omission on his/her part committed
whilst rendering professional service. Legal cost and expenses incurred in
defense of the case, with the prior consent of the insurance company, are also
payable, subject to the overall limit of indemnity selected. Only civil liability
claims are covered. Any liability arising out of any criminal act or act
committed in violation of any law or ordinance is not covered.
WHO SHOULD HAVE IT AS MUST MANDATE TO BUY THIS INSURANCE / POLICY:
The policy is meant
for professionals. Insurance companies issue 'Professional Indemnity' policies to the following
group of professionals:-
1.
Doctors and medical
practitioners - which covers registered medical practitioners like physicians,
surgeons, cardiologists, pathologists etc.
2.
Medical establishments
- which covers legal liability falling on the medical establishment such as
hospitals and nursing homes, as a result of error or omission committed by any
named professional or qualified assistants engaged by the medical
establishment.
3.
Engineers, architects
and interior decorators.
4.
Lawyers, advocates,
solicitors and counsels.
5.
Chartered accountants,
financial accountants, management consultants.
SUM INSURED:
In Professional
Indemnity Policy, the sum insured is referred to as Limit of Indemnity. This
limit is fixed per accident and per policy period which is called Any One
Accident (AOA) limit and Any One Year (AOY) limit respectively. The AOA limit, which
is the maximum amount payable for each accident, should be fixed taking into
account the nature of activity of the insured and the maximum number of people
who could be affected and maximum property damage that could occur, in the worst
possible accident.
In the case of
Professional Indemnity policy issued to engineers, architects, interior
decorators, lawyers, advocates, solicitors, counsels, chartered accountants,
financial accountants and management consultants, the Any One Accident (AOA)
limit is restricted to 25% of the Any One Year (AOY) limit.
CLAIMS:
The term
"liability" means responsibility and "legal liability"
means responsibilities which can be enforced by law. Legal Liability may be
classified into Criminal Liability and Civil Liability. Only Civil Liability
claims are payable.
Civil Liability claims
will arise if there is prima facie evidence of negligence by the insured
resulting in injury or death to any third party or resulting in damage to
property belonging to a person other than insured.
Negligence will be
proved only when following conditions are satisfied:
1.
Existence of duty of
care
2.
Breach of this duty
3.
Injury suffered by a
person or property damaged as a result of that breach.
In case of any event
likely to give rise to a liability claim as described above, insurance company
should be informed immediately. In case any legal notice or summons is
received, it should be sent to the insurance company. The company has the
option of arranging the defence of the case.
The event giving rise
to the claim should have occured during the period of insurance or retroactive
period and the claim first made in writing against the insured during the
policy period. The maximum amount payable including defense cost will be the
AOA limit selected. The Any One Year limit will get reduced by the amount of
claim or indemnity paid for any one accident. Any number of such claims made
during the policy period will be covered subject to the total indemnity not
exceeding the Any One Year limit.
Most of the policies do not
pay for claims arising out of contractual liability, intentional non-compliance
of any statutory provision, loss of goodwill, slander , fines ,penalties ,
libel , false arrest , defamation , mental injury etc.
TYPES OF OTHER LIABILITY POLICIES / INSURANCE:
Other then Professional Indemnity Policy their are many other type of liability policies / Insurances are in offer by Insurance Companies. To name some:
1- Public Liability Policy
2- Product liability Policy
3- Directors and Officers Liability Policy
4- Liability Insurance Act Policy
5- Employer's Liability Policy
6- Third Party Insurance
7- Carrier's Liability Insurance
8- Golfer's Indemnity Insurance
We shall talk about each one of them in future in our blog. So keep reading this space for knowing more on this subject of Liability Insurances.
Manish K Pandey
CEO & Founding Director
Fern Wealth Advisors Private Limited
Email - fernwealthadvisors@gmail.com
Website - www.fernwealth.com
# +91-9830040603
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