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Consumer Protection Act and Medical Profession

Protection against Outcome of Litigation

A tertiary level of protection against outcome of litigation would be to go for Insurance cover. PROFESSIONAL INDEMNITY INSURANCE cover became available for Doctors and Medical establishments only recently, i.e. from December, 1991.

The term " indemnity " means reimbursement, to compensate.The principle of indemnity is strictly observed in liability insurances. These insurances ( e.g., Professional Indemnity Insurance ) are designed to provide the insured person protection against the financial consequences of legal liability.If the insured is legally liable to pay damages to others, the policy will indemnify him subject to the terms, conditions and limitations of the contract. Indemnity is also available in respect of legal costs awarded against the insured as well as legal costs and expenses incurred by the insured with the written consent of the insurers in the defence of settlement of claims.

Professional Indemnity Insurance

Salient features and terms and conditions of Professional Indemnity Insurance Policy as provided by the General Insurance Corporation of India are given hereunder :-

General Rules and Regulations:

1. Applicability - The policy provides insurance cover in respect of ERRORS and OMISSIONS on the part of the professionals whilst rendering their services. This applies to Doctors and Medical Establishments, Engineers, Financial Consultants, Management Consultants, Lawyers, Advocates, Solicitors and Counsels. The agreeable limits within India and including Nepal / Bhutan, for any one year/during the policy period, shall not exceed Rs. 2 crores.

2. Standard Proposal Form - Insurers shall obtain duly completed Standard Proposal Form from the prosecutors at inception and subsequent renewals. No cover shall be granted unless a declaration as provided for in the proposal form is obtained from the proposer to the effect that all statutory requirements relating to the business activities are complied with.

3. Standard Policy Form - All policies fresh and renewals issued shall be in the Standard Policy Form prescribed by the insurance company / corporation.

4. Liabilities covered - Policies issued under this scheme shall cover all sums which the Insured becomes legally liable to pay as damages to third party in respect of ERRORS and/or OMISSIONS on the part of the Insured whilst rendering professional services, arising out of claims first made in writing against the insured during the policy period, including legal costs and expenses incurred with the prior consent of insurer, subject always to the limits of indemnity and other terms, conditions and exceptions of the policy. It shall notbe permissible to issue any Professional Indemnity Insurance Policy with unlimited liability.

5. Premium - The rates of premium under the Agreement are annual rates. Full premium under the policy shall be paid at inception. It is not permissble to accept premium in installments.Turnover figure whenever required shall be as far as possible accurately assessed and declared by the proposer at inception of the policy. In case the insured anticipates any increase /decrease in turnover during the policy period such fluctuations should be immediately notified to the Insurer and necessary adjustments made. Under no circumstances it shall be permissible to adjust the premium for the turnover after expiry of the policy.

6. Retroactive Date - Retroactive Date is the date when the risk is first incepted under a claims made policy and thereafter renewed without break in the period of cover.

7. Revision in Limits of Indemnity - No revisions ( increase / decrease ) shall be allowed in the limits of Indemnity during the currency of the policy.For any upward revision in indemnity limits at renewals, the retroactive date shall be the inception date of the Policy renewal, so far as the increased limits are applicable.

8. Compulsory Excess - All policies issued under the Agreement shall be subject to compulsory excess of certain fixed percentage of the limit of indemnity per any one accident or any one year subject to a minimum of Rs. 1,000 and maximum of Rs. 1,00,000 ( Rupees One Lakh Only) . The Insured shall bear this Compulsory Excess which is applicable to both property damage claims and death /bodily injury claims inclusive of defence costs arising out of any one accident. This excess is not applicable for Doctors and Medical Practitioners.

9. Voluntary Excess - The following discounts on the premium may be allowed for Voluntary Excess opted by the Insured except for policy for Doctors and Medical Practitioners. But these are applicable in case of insurance policies obtained by Hospitals and Medical Establishments.

Voluntary Excess (percentage) of
limit of Indemnity per any one Accident Discount (%)

1 2.5

2 5.0

4 7.5

6 10.0

8 12.5

10 15.0

10. Short Period Premium - It shall not be permissible to issue Policies for periods more than 12 months. The following short period scale of premium shall apply to (i) policies issued for periods less than 12 months and (ii) policies cancelled during the currency at the request of the insured subject to no claims :

Period Rate

Not exceeding one month 1/4th of the annual premium

Not exceeding two months 3/8th of the annual premium

Not exceeding three months 1/2th of the annual premium

Not exceeding four months 5/8th of the annual premium

Not exceeding six months 3/4th of the annual premium

Exceeding six months Full annual premium

For annual policies cancelled during the currency at the request of the insured,premium should be adjusted at the Short Period Scales for the actual period of cover subject to no claims.No refund is permissible in case of any claim under the policy.

The short period premium is subject to the minimum premium in the Rating Schedule.

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