It is important for businesses that offer services to their clients to have professional indemnity insurance. Also known as Errors and Omissions Insurance, insurance protects providers of professional services from legal liability issues. The insurance covers damages due to negligence or breach of professional duty as a result of an omission, error, or act committed that leads to a loss or damage to the client’s monetary amount.
According to the law, the term indemnity insurance refers to a person or company (Insurer) compensating another for a financial loss or obligation. An indemnity insurance agreement is an agreement in which a company agrees to indemnify another against future losses.
Assuring you are protected from loss or damage is indemnity insurance. The principle of indemnity is one of those rules of insurance that states that the insurer cannot compensate an insured for losses that exceed the insured’s economic loss. As a result of this type of insurance policy, the insured will receive compensation equivalent to the actual loss, not any amount that exceeds it.
An indemnity insurance policy is designed to put your clinic back in the same financial position it was before the loss. Among the types of losses, there are legal fees, compensation awarded to clients, and more. In most cases, these expenses result from mistakes you have made in your work, delivering work that clients are unhappy with, or managing a difficult client.
In what ways is professional indemnity insurance advantageous for doctors?
Your Professional Indemnity Insurance policy covers medical practitioners and other professions. For healthcare professionals, it gives them protection against issues that result from any mistake, mistaken act, or omission incurred while providing their services. These malpractice insurance policies cover the insured professionals for injury, loss, or damage claims.
- Protection against several kinds of damages
E&O Insurance provides coverage for intangible damages, such as those arising from reputation damage, data breach, and slander, among others.
- Secures skilled professionals
Individual consultants like doctors, dieticians, and others who offer professional advice and services in the medical field, are at risk of getting sued for negligence or failure to provide the expected services.
- Affordable for small businesses
Clinics in small towns can benefit from malpractice insurance if their clients sue them for damages they perceive to be related to their services.
- Damage’s distance from the source
The doctor seeking indemnification will only need to prove that an event occurred and that a loss was sustained without proving causation. If malpractice insurance is drafted correctly, the advantage here could be significant.
- Mitigation of losses
Doctors that enter into a contract are generally required to mitigate the loss caused by a breach. In contrast, a malpractice insurance claim does not have a similar restriction (although it can be difficult for an indemnity holder to argue that it is not responsible for mitigating losses).
- A limitation period under the law
Damage claims for breach of the contract become statute-barred six years after the breach. An indemnity, however, cannot begin to run until the malpractice insurance provider fails to respond to the claim following it, which effectively extends the normal statutory limitation period.
