Insurance

What Is Professional Indemnity Cover And Do You Need It?

Such a plan covers legal defense costs, pays for the settlement costs (subject to policy terms), and even investigates the claim made by the client in case of a professional's mistake or negligence, thereby helping protect the professional's finances and reputation

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Let us say that a doctor is sued for misdiagnosis. Professional indemnity cover provides compensation against any legal fees or compensation. 

Professional indemnity insurance is a type of insurance plan that provides coverage to professionals (those who offer professional services or advice) such as engineers, doctors, lawyers, accountants, consultants, architects, etc. It protects them from any client-related legal issues or if the client accuses the policyholder of negligence, breach of duty, errors, or omissions. 

According to media reports, a union of more than 15,000 pharmacists across the country has asked the Insurance Regulatory and Development Authority of India to include them in the list of professionals who are eligible for professional indemnity insurance. 

What It Covers 

“Such a plan covers legal defense costs, pays for the settlement costs (subject to policy terms) and even investigates the claim made by the client in case of a professional's mistake or negligence, thereby helping protect the professional's finances and reputation,” says Santosh Sahoo, vice president, SME Insurance at Probus.

So essentially, the policy covers the insured against any damages to a third party in respect of any errors or omissions in the process of rendering professional services. It covers any sum that has been claimed against the insured during the policy period. 

Exclusions 

There are certain exclusions under the policy. For example, in the case of a doctor, any criminal act, fines, or penalties are excluded. Any services rendered under the influence of narcotics are not covered. Similarly, the coverage will not be provided if the procedure is not done properly at a hospital. 

How Much Cover Should You Get

The sum assured for a professional indemnity cover would depend upon the profession and risk exposure. For example, a doctor should opt for a cover which may range from Rs 25 lakh to Rs one crore, depending on what they specialize in. 

Surgeons would usually require a higher coverage. Lawyers and chartered accountants can go for a coverage of up to Rs 50 lakh. Architects and engineers may need a higher amount depending on the scale of the projects they are involved in. 

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