A WRITE-UP ON HOSPITAL INDEMNITY POLICY
AUTHOR : SHRI M.K. SINHA (R.M. RETIRED, UNITED INDIA)
The recent incident of fire in a reputed private hospital at Bhubaneshwar resulting into death of 21 persons has given rise to thoughts for making Professional Indemnity Insurance compulsory for all registered hospitals in India so as to grant financial relief to the victim's’ family.
This specially designed policy for hospitals and medical establishment covers legal liability arising out of error or omission committed by it during the service rendered by it to the patients in and OPD both.
Insured will be covered for any professional act or omission occurring during the period of insurance. If the policy has been renewed without interruption, the commencement date of the first policy shall be the benchmark and any act/omission conducted after that shall be covered even if reported in the second or third renewal is called retroactive date.
The policy will pay for -
(a) Legal liability as fixed by courts in India to pay compensation.
(b) Defence case and expenses incurred with the prior consent of the Insurance Company in the investigation, defence or settlement of any claims provided the claim falls within the ambit of the policy.
The amount payable under (a) and (b) shall not exceed the limit per accident opted by the Insured hospital and mentioned in the policy.
Before a hospital decides to take out this policy it has to decide the Sum Insured referred to as limit of indemnity fixed per accident and per policy provided as AOA and AOY (Anyone accident / Any one year) The ratio between these two would be 1:1, 1:2, 1:3 or 1:4.
AOA limit is the maximum amount payable for each accident which should be fixed taking into account the nature of activity and the maximum number of people who could be affected in the worst possible accident.
What the policy will not pay for -
(1) Third Party public liability.
(2) Fines, penalties, punitive or exemplary damages.
(3) Any loss of financial nature like loss of goodwill, loss of market etc.
(4) Liability assumed by agreement and which would not have attached if not for the agreement.
(5) Liability arising out of criminal act in violations of any law or ordinance.
(6) Service rendered under the influence of intoxicant or narcotics.
(7) Plastic surgery except for repair of scar being the result of previous surgery or burns or other treatment or surgery.
(8) Use of drugs for weight reduction.
(9) AIDS related condition.
(10) Genetic injuries caused by x-ray and radioactive substance.
(11) Caused by intentional disregard of compliance of statutory provisions or administrative management of the need to take care to prevent damage.
(12) Liability to employees / officers / contractor / general Liability to third party public.
When you approach an Insurer for taking insurance the following questions apart from general inquiries are asked to determine the premium rate -
Medical Establishments -
(1) General or specialisation in a particular line.
(2) Limits of AOA and AOY.
(3) Ration between these 1:1, 1:2, 1:3 and 1:4.
(4) No. of beds.
(5) No. of persons treated in OPD
(6) Whether unqualified staff working with Doctor?
(7) No. of Doctor permanently attached to the hospital?
(8) No. of visiting Doctors?
(9) No. of Nursing staff and ward-boys?
(10) Whether radiology department is functional?
There are some special benefits associated with this policy.
(1) Unqualified staff can be covered by paying additional premium.
(2) Notification extension clause :-
If the Insured notifies during the policy period any specific event or circumstances which he thinks may give rise to a claim in future then the acceptance of such notification means that the Insured will deal with the claim as if it was made within policy-period.
(3) Extended claim reporting clause.
In the event of nonrenewal or cancellation of the policy the Insurer allows a time limit upto 90 days after the expiry of the policy for notification of claims for accidents which took place during the policy-period.
Important Conditions -
Early written notice of any claim received is intimated to Insurer. Summons as well as defence documents are to be handed over to Insurer.
No admission offer, promise or payment to be made without the consent of the Insurer.
The Insurer has the right to take over and conduct the case in the name of Insured so as to defend or out of court settlement.
The Insured shall give information and assistance to the Company which it may require reasonably.
There is no compulsory / voluntary deductible to be borne by the Insured in case of claim.
The policy offers a benefit of retroactive period on continued renewal of policy whereby claims reported in subsequent renewals pertaining to earlier policy after the inception of the first policy also become payable.
How to claim ?
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. The claims are payable only in respect of civil liability.
Civil liability claims will arise if there is some prima-facie evidence of negligence on the part of Insured. Negligence may be proved only when the following conditions are satisfied.
(1) Existence of duty of care
(2) Breach of the duty
(3) Injury caused due to breach of duty.
In case of any event likely to give rise to a liability claim Insurance Company should be informed immediately. Any notice or summons received should be handed over to the Insurer. The Company has the option to arrange defence.
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Contributed by :-
Sh. M.K. Sinha
Regional Manager (Retired)
United India Insurance Co.Ltd.
manojsinha20@gmail.com
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