Limit of Indemnity or Sum Insured
In professional indemnity insurance policy, the sum insured is referred to as Limit of Indemnity. This limit is fixed per accident and per policy period. It is called Any One Accident (AOA) limit and Any One Year (AOY) limit respectively. The ratio of AOA limit to AOY limit can be chosen. The AOA limit, which is the maximum amount payable for each accident, should be fixed beforehand. The ratio of AOA limit to AOY limit can be chosen from the following:-
- 1:1 which means that you can claim your full sum assured for any one claim.
- 1:2 which means you can claim maximum of 50% of the sum assured for any one claim.
- 1:3 which means that you can claim a third of the sum insured for any one claim.
- 1:4 which means that you can claim 25% of the sum insured for any one claim.
The AOA limit, which is the maximum amount payable for each accident, should be fixed taking into account the nature of activity of the insured, the maximum number of people who could be affected and maximum property damage that could occur, in the worst possible accident.
The limit of liability should be selected carefully so that it covers any legal obligation that the insured may face at any given point of time based on his contract size, clientele spread, and contractual features with the clients. The adequacy of sum insured and the coverage with extensions opted are the most important factors to be borne in mind while taking the cover.
Premium chargeable depends on the:-
- The area of specialization or the risk group of the doctor
- The size of the hospital or the number of patients the physician attends to in a day
- Limits of indemnity selected
- Ratio of limits
- Past claim experience