If you run your own medical practice or work for a hospital, a good indemnity policy is a must-have because it shields you from unforeseen pitfalls. But, buying the wrong policy is worse than not having an indemnity cover at all.
Experts highlight the four most common mistakes doctors make when buying an indemnity insurance policy:
Mistake #1: Not understanding the difference between the types of coverage
You need to understand the difference between the two types of coverage available
a) Occurrence; and b) Claims made
a) In occurrence coverage, unintended negligence/injury should have happened when the policy was active whereas the claim arising out of that negligence can be made much later. In this coverage, the timing of the claim does not matter and it also covers those claims which arise many years after the policy’s expiry.
b) In claims made coverage, the claim must occur while the policy is still active, whereas the unintended negligence/injury to the patient resulting in the claim could have happened prior to you buying the policy.
TIP: It is important to understand the pros and cons, the scope of coverage, cost of the premium associated with the two types of coverage before deciding on which coverage to buy. With the insurer’s consent, you can also switch from one type of coverage to the other at the time of policy renewal.
Mistake #2: Settling for the cheapest deal
Comparing premiums is essential, but never let it be the sole deciding factor for choosing a policy. Cheaper professional indemnity plans will obviously contain lesser features and reduced coverage, and it is necessary to strike a balance between the coverage you need and the premium you are willing to pay.
TIP: While buying a professional indemnity insurance plan, it is essential to have a look at other important parameters such as the scope of cover, policy benefits, exclusions, claim settlement ratio of the insurance company, etc.
Mistake #3: Not choosing the right amount of insurance coverage
Insurance cover means the sum insured under the policy. It also implies the “limit of indemnity” or the maximum sum of money which an insurance company is liable to cover in the event of a claim. Not buying adequate sum insured under the policy is the common mistake because any amount above the limit of indemnity has to be borne by you.
TIP: One must consider the current and future amount of civil–legal liability and litigation filed against doctors by the claimant. Review recent cases and see how much compensation was awarded to claimants in each. Also, do not forget to revise the sum insured periodically to factor in inflation.
Mistake #4: Not reading the terms and conditions thoroughly
Not reading the fine print of a policy is another mistake one should avoid. Looking at just what is covered is not enough. An insurance policy’s terms and conditions are important and should be read and understood before you buy it.
TIP: Ask the insurance company’s representative to explain all items in the terms and conditions section of the policy. Keep an eye out for the list of exclusions, such as contractual liability, intentional non‐compliance of any statutory provision, loss of goodwill, fines, penalties, defamation, mental injury, etc., which are not covered.