Any professional acting professional capacity is bound to exercise due care & skill required by a competent practitioner in that profession. His failure to exercise due care may give cause of action against him by his client since such duty to the client applies to any profession be that of a doctor, solocitor or an accountant.
Taking into view the above aspects there could be two counts upon which an action may be based for damages due to negligence
The defendent did not have the necessary degree of skill
The defendent having the necessary skill did not exercise the same in particular case.
The consequences of such an action could be very grievous as far as the professional is concerned since it may invite unwanted publicity. Moreover, any such action not only effects the reputation of the professional but may also invite bankruptcy.
In view of awareness of rights by individual, even though there is negative experience for this class of business, since there was no standardised underwriting, due to market demand it was found necessary to standardise this policy and introduce market agreement for all the subsidiaries.
This agreement came into effect from 1.12.91 and applies to Insurance relating to errors and omissions on the part of professional whilist rendering the services.
The agreement applies to all the professionals of medical profession/establishments, Engineers, Architects, Interior Decorators, Chartered Accountants, Financial/ Management consultants, Lawyers/Advocates/Solicitors and Counsels.
Agreegate limits within geographical limits of India including Nepal/Bhutan for one year during policy period shall not exceed Rs. 2 crs.
Any other proposal should be referred to GIC/Market Agreement Committee for acceptance as well as fixing of rates, terms and conditions.
Any other professional other than that stated above shall also be referred to GIC/Market Agreement Committee where limit exceeds Rs. 1 crore. In case of limits less than Rs. 1 crore, the same can be underwritten by the Company.
Proposal Form : Each category proposal forms are standardised and have to be submitted duly filled in not only at inception of cover but also on renewals. No proposal shall be accepted unless proposal form is submitted with duly signed declaration that all statutory requirements pertaining to the profession are complied with.
Liabilities Covered : This agreement covers all sums which Insured becomes legally liable to pay as damages to third party for any errors and ommissions committed by Insured whilist rendering professional services during the policy period. This also includes legal costs/expenses incurred duly approved by the Company, maximum within limits of indemnity so covered.
This policy cannot be issued with unlimited indemnity limits.
Premium : To be paid at inception annually and not acceptable installments. Wherever required as far as possible, accurate Turnover figures shall be submitted. In case any increase/decrease in turnover is anticipated, the same should be notified immediately for necessary adjustments since no adjustments are allowed after expiry of the policy.
Retroactive Date : This is the first incepted date under claims made Policy renewed without break in period of cover.
Any one accident limit shall be 25% of any one year limit.
Excess Compulsory : All Policies are subject to compulsory excess of fixed percentage with minimum limits Rs. 1000/- or 5,000/- and maximum Rs. 100,000/-. This is applicable to both death/bodily injury or property damage including Defence costs due to any one accident. Doctor’s /Medical Practitioner’s Policy is not subject to this excess. Each Policy has specific percentage with minimum and maximum limit being Rs. 100,000/-
Excess, Voluntary : In case insured opts for this, voluntary discount in premium is allowed from 2.5% to 15% depending on opted percentage of limit of indemnity per any one accident ranging from 1% to 10%. This excess shall be in addition to compulsory excess.
In no case the Policy can be issued for more than 12 months and has prescribed short Period Scales for Policy less than 12 months.
Cancellation of Policy can be allowed subject to there being no claim, No Refund is permissible if policy is cancelled subsequent to claim.
Each category of Professional Indemnity prescribes minimum premium.
Jurisdiction available for all policies will be Indian Courts.
Policy Conditions applicable to all categories of Professional Indemnity Insurance :
The Policy defines “policy period (midnight to midnight) and period of Insurance commencing from retroactive date.
Notification Extension Clause: In event of any claim mae against Insured in view of circumstances giving rise to a claim and the same is subsequently reported by Insured to the Company, the claim will be dealt with by the Company as if it has been first made against Insured. Maximum limit for notification will be stipulated time limit as per Indian Limitation Act.
Extended Claim Reporting Clause: In case of non-renewal or cancellation of policy extended, claim reporting time limit is 90 days from date of expiry/cancellation of the Policy and the claims reported thereunder shall be handled as if made on last day of expiring Policy for any accident/occurrence taken place during Policy Period.
If any Insurance is in force during this extended reporting period, there will not be any extended period available under expired/cancelled policy.
Claim Series Clause: Where series of losses occur due to the same event, error, ommission related to professional services, claims shall be added together and shall be treated as one claim. Any claim made should not be later than 3 years after the first claim of the series.
Exclusions :
Criminal act or any act committed in violence of law or ordinance
Any services rendered under influence of intoxicants;
Third Party liability
Any contractual liability which would not exist but for the contract.
Non compliance of statutory provisions
Loss of goodwill/market
Any libel, slander, false arrest, detention
Fine, penalty punitive or exemplary damages.
War and allied perils, radioactive contamination, nuclear components.
Deliberate disregard of technical/administrative management &/or reasonable steps to prevent the claim
Any death/injury/damage under contract of employment with insured.
CONDITIONS:
Written notice to the Company in event of any claim or any circumstances thereof. All writ/summons forwarded to the Company immediately on receipt.
No admission of liability or any offer thereat without prior consent of the Company.
The Company has right, not obligation to take over and conduct defence proceedings and settlement of claim. Any expenditure incurred thereof shall reduce the limit of indemnity. This action will not in any way modify Company’s liability under the Policy.
Insured shall co-operate to provide all necessary information.
Material change/circumstances will have bearing on claim provided such information on policy condition shall be provided expeditiously.
Upon settlement of any claim or series of claims or any lesser amount for which claim has been settled, the Company shall relinquish the conduct and control of any further liability in context thereof.
The interpretation of Policy and the schedule shall be read together as contract and shall bear such specific meaning wherever it may apperar. All the terms/exclusions shall be interpreted in accordance with Indian Law.
Contribution condition stating Company shall not be called upon to pay more than their rateable proportion of loss in event of there being another liability Insurance or any other person covering similar liability.
30 days’ cancellation notice by Company pro-rata return of premium subject to minimum retention of percentage of premium for unexpired period.
Policy may be cancelled by Insured by giving 30 day’s notice retention at short period subject to no claim. In case of claim no refund would be allowed.
In event of claim under Policy the limit of indemnity under A.O.A. stands reduced to the extent of quantum of liability. No reinstatement allowed. on that count.
Any disclaimer of liability by the Company, claim becomes time bar unless suit filed within 12 months of such disclaimer.
Any fraud/mis-statement /non-disclosure, there will be no liability under the policy.
Jurisdiction within India & Indian Court.
Policy dispute clause – regarding interpretation, subject to Indian law.
There are certain policy conditions which are related to specific Professional Indemnity insurance cover.
Proposal Form : Each category Insurance has separate proposal form, Questionalre form which would enable the company to decide acceptance as well as underwriting of the business.
Basis of Rating:
Medical Professional Indemnity as per schedule given below.
Medical establishment: Basis of Premium rating depends (i) Rate 3 per mille, on AOY limit + per inpatient Rs. 5 as well as per outpatient Rs. 1 (No. of patients are taken based on previous year’s records or anticipated No. of current year whichever are more. Comp. Excess @ 0.25% AOY or minimum Rs. 1000/- maximum Rs. 100,000.
Additional Premium should be charged for any Radioactive treatment (except X-ray) which would be 15% on total premium.
Minimum Premium is Rs. 1000/-
Engineers, Architects, Building Contractors @ 7.5 per mille on AOY limit + 1 per mille on Annual Fees. Excess @ 1/2% AOY or minimum Rs.5000/- or maximum Rs.10,000/-.
Minimum Premium is Rs.1000/-
Chartered Accountants, financial/Management Consultants: @ 4 per mille on AOY limit + 100 per capita for qualified persons + 50 per capita for apprentice + 25 per capita other employees like clerical, typist, steno – staff.
Excess as per category(c).
Minimum premium is Rs.1000/-
Advocate, Lawyers, Solicitors : @ 5 per mille AOY limit + 150 Per Capita Qualified and Junior Person + Rs.50 per capita other staff (clerical, typist).
Excess as (c) above.
Rating
Limit of Indemnity for any one accident and policy period would be identical
SCHEDULE OF RATES
(To be charged on Any One Year Limit)
a) Physicians without dispensing and other 0.5 per mille on AOY limit
facilities General Pathologist, Radiologist
b) General Physicians with facilities like 10% additional premium for each facility
Dispensing/Pathological/Radiological etc. subject to maximum of 25%
a) specialists/consulting Physician (Non-Surgical) 1.0 per mille on AOY limit
b) For other facilities (Specify) such as E.C.G. 10% extra for each facility subject to a
X-Ray, Scanning, Sonography etc. maximum of 25%
a) Surgeons excluding specialists in Plastic Surgery 2.0 per mille on AOY limit
Lithotripsy, Dentists & similar extra corposal
Methods of treatment would fall within this category
b) For other facilities (specify) such as E.C.G, 10% extra for each facility subject to a
X-Ray, Scanning, Sonography etc. maximum of 25%
a) Diagnostic Centres 1.0 per mille on AOY limit
b) For other facilities (specify) such as E.C.G., 10% extra for each facility, subject to a
X-Ray, Scanning, Sonography etc. maximum of 25%
a) Surgeons (Plastic Surgery) 3 per mille on AOY limit
b) For other facilities (specify) such as E.C.G., 10% extra for each facility subject to a
X-Ray, Scanning, Sonography etc. maximum of 25%
Minimum Premium Rs. 100/-
No Compulsory or Voluntary Deductibles are applicable