What is indemnity insurance?

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What is indemnity insurance?
In a consumer-friendly era, when law in our country has begun to favour consumers through consumer grievance redressal forums, different professionals and companies offering skillful service are no more spared for their negligence while providing services. This is when indemnity insurance comes into play and helps you cover and restore financial obligation if not the lost goodwill on account of the unintended negligence. Further, the opt of indemnity insurance suggests that the resulted damage or loss to the concerned person is not on account of any wilful neglect or executed deliberately.

Professional Indemnity Insurance: For whom?

All individuals in professions ranging from medical, legal, accountants to other establishments providing skill based services such as brokerage houses, medical establishments etc. qualify for opting indemnity insurance.

How is the premium and sum assured for an indemnity insurance decided?

The sum assured for the indemnity insurance is referred as limit of liability. The amount is determined by the insurer and it is the extent to which the insuring company is willing to cover the losses accruing to the professional on account of some error, negligence or omission.

Premium for the professional cover is generally charged @ 0.3%-1% of the total sum insured. And depends on several factors including profession type; experience in the profession; revenue generated; jurisdiction and claim experience among others.

Which all insurance companies are providing professional liability cover in India?

From age-old insurance companies to new general insurers nearly all insurance companies in India are providing indemnity cover. Some of them being United India, New India Assurance, National Insurance, ICICI Lombard, HDFC Ergo, Bajaj Allianz, Tata-AIG and some others are offering the facility. Some of the insurers even offer custom-made indemnity professional covers specific to different professions.

What is the major advantage of opting for indemnity insurance?

The major advantage of indemnity insurance is that it partly meets the liability claim raised by customers/ clients on professionals which in several cases can turn out to be huge. Other than this, the insurance also covers the cost incurred in defending the case.

What are some of the points to remember when purchasing indemnity cover?

One should ensure that the insured sum is sufficient enough. Also as there can be considerable time gap between the event of default on the part of the insured and claims made, an insured individual should make sure that he/she remains covered at both the times. So, in certain cases a run-off cover can be opted for in certain case for future time.

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