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Indemnity and Professional Insurance

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Doctors Risk

Indemnity and Professional Insurance

The term Indemnity is understood by a common man as a contractual agreement between parties in which one party agrees to pay losses or damages suffered by another party. Indemnity is also misunderstood as compensation, but there is a distinction between Indemnity and compensation or damages paid as former is more specific in its connotation.

Understanding Indemnity and Damages in the Indian Contract Act 1872

Before exploring the nuances between Damages and Indemnity, first, we need to understand the statutory wordings. The provision for Damages is Defined u/s 74  Compensation for breach of contract where penalty stipulated for – “When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for.”

Whereas, section 124 stipulates the Indemnity as “A contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person.”

Section 124 and 74 highlights some of the peculiar differences such as;

  1. In Indemnity, the indemnifier is liable for third party claims also, whereas damages can only be claimed from the party who breaches the contract.
  2. The claim of damages can only be brought after a breach of contract, unlike Indemnity claim which can be prior to the actual loss suffered.
  3. Indemnity clause makes provision for losses due to consequential, indirect and remote causes which are not covered by damages provision.
  4. For claiming damages there has been a direct relationship between damage caused due to breach of contract, but indemnity can be claimed without demonstrating it.  

Also, it was held by the Bombay High Court while interpreting indemnity provisions in Gajanan Moreshwar Parelkar v. Moreshwar Madan Mantri that contract act is not exhaustive and during the conflict between Contract Act and judicial decisions, then Common Law principles associated with contracts will always be relied upon.

 

Professional Indemnity Insurance

Professional indemnity insurance, also referred to as professional liability insurance, is a type of business insurance for individuals or organisations involved in providing consultations or services, involving a high degree of skills such as Doctors, Architects, Accountants etc. This insurance covers the legal costs and expenses incurred as well as loss suffered due to compensation paid when they are sued by their clients on grounds of inadequate advice, services or designs that cause your client to lose money or cause any damage. Here, the insurance company acts as indemnifier and the professional is an indemnity holder.

 

Need for Indemnity Insurance?

In some jurisdictions, it is statutorily mandated to have indemnity insurance or can be made compulsory by the respective industry’s regulatory body. In India, it is compulsory for financial advisors post companies act,2013. Even if one is not obliged to have professional indemnity it is still better to have basic indemnity insurance as per industry requirements to mitigate future problems.

Cost of professional indemnity insurance?

In India, a premium for any cover is usually around 0.3 %- 1% of the sum insured.

Types of Professional Insurance AOA and AOY 

Any policy pays the sum assured after maturity as in Life Insurance or on the claim as in Motor Insurance or Professional Insurance. The distinction between Anyone Accident (AOA) and Any One Year (AOY) is based on the sum insured. The sum insured is referred to as Limit of Indemnity and is fixed as per accident and per policy period. The ratio of AOA and AOY limit is the deciding factor for the amount payable for each accident or incident of negligence. The types of AOY and AOA ratios offered depend on the insurance company. It usually ranges from 1:1 to 1:4

For example, consider a doctor who has a professional indemnity insurance cover for Rs. 5,00,000 and has a policy of AOY-AOA ratio 1:2. In case he is liable to pay Rs.3, 00,000 as compensation for a lost cause, the company will only pay Rs.2, 50,000 since the policy has to cover two accidents in a year. Here, the practitioner will have a cover of the remaining Rs.2, 50,000 for another accident during the same period.

What does Professional Indemnity not cover?

A professional indemnity may not cover the claims arising from the following aspects of practice:

  1. Medical practice is done under the influence of alcohol or narcotics
  2. Intentional non-compliance, willful neglect, deliberate act
  3. The medical treatment is given for weight loss, plastic surgery, genetic damages, and conditions associated with AIDS
  4. A criminal act, penalties, fines, punitive, and exemplary damages
  5. Loss of goodwill 

Things to remember while taking Professional Indemnity

  1. The limits of cover offered and under what circumstances.
  2. The instances where cover offered but entailed due to above-mentioned reasons.
  3. Ascertain the risk and exposure involved and to what extent the company is indemnifying 
  4. The amount of premium involved which must be aligned with your budget
  5. Insurance broker services after-sale
  6. Contracting conditions and geographical limits

As consumers are getting more aware of their rights and professional duties, they are also garnering the judicial system’s empathy on grounds of a fiduciary relationship. It is imperative to have professional indemnity insurance for professionals such as doctors, accountants, etc that takes care of the legal and financial implications of the medical practice.

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Minimalism the way to happier Life

Doctors Risk

Doctors Risk

Minimalism the way to happier Life

आशाया ये दासास्ते दासाः सर्वलोकस्य । आशा येषां दासी तेषां दासायते लोकः ॥

āśāyā ye dāsāste dāsāḥ sarvalokasya । āśā yeṣāṃ dāsī teṣāṃ dāsāyate lokaḥ ॥

People who are servants of desires are also servants of the whole world. For those to whom desire is a servant, the whole world also is a servant.

The above shlok is from Subhashita Manjari – 8.53, highlights the ancient Indian philosophy of minimalism i.e. less is more. Desires are boundless just like the universe. The journey to fulfil one’s desire is everlasting because as we fulfil one desire, another creeps in.An individual likes to bike first; then he wants a scooter, then a motorcycle, etc. if one cannot regulate his yearning and becomes a slave to them, he has to be a servant to everyone to fulfil his desires. On the other hand, When you are a master of your wants, then you are a master of the universe because you don’t foresee anything from anyone.

  

What is Minimalism?

Minimalism is intentionally living with only those things which one requires to support their purpose. It’s the process of decluttering your life and your surroundings from excess possessions so that one can become more mindful and focus on things that matter most. 

To put it simply, being a minimalist myself, while buying stuff I ask myself this question “will I be needing this particular product 3 months down the line?” if the answer is yes, then I go ahead with the purchase. Mind you this does include purchases made out of utmost necessity. Thus, minimalism is a tool to find liberty from worrying, from guilt, from overwhelm, from depression and most importantly from the nets of consumer culture.  

Does Minimalism is juxtapose of Possession

Generally, people believe that being Minimalist means renouncing possession, but in reality, minimalism is all about experiencing the possession to the fullest without burdening one’s senses with unnecessary materials. In today’s time, we focus on acquiring more and more material possessions often neglecting our health be it mental and physical. We often forsake our passion, our health, our personal growth and our desire to contribute beyond ourselves in lieu of owning more materialistic possessions. Minimalism simply facilitates conscious deliberation of owning possessions. The modern day minimalism is reflection of ancient indian philosophy of living a purpose driven life rather possession driven life.

Various aspects of Minimalism;

  • Being Intentional 

The core of minimalism lies in being intentional about the things we consume. It is marked by consumerism of clarity and purpose, which is reflected by improvement in other aspects of our life. Intentionality can vary from person to person but essence lies in introspection of one’s needs and desire.

  • Liberation from passion for possession

Minimalism breaks the myth of modern culture of possession culminating into life of blissfulness. Minimalism realign our inner compass for passion of possession to passion of having a life full of purpose. Its soul focus is on vivid experiences. It lets us see all that we already have and reminds us to be grateful. In doing so, we find more abundant life.

  • Provides canvas to be different

Human life is the culmination of various environments that he is a part of be it family, friends, co-workers or neighbors.the portraital of a certain image becomes necessary owing to lifestyle ones want to fit in as per individual’s circumstances. On the other hand minimalism allows us to pursue a lifestyle which is simple, completely transferable and adaptable as per the situation.It is reliable, dependable and unfluctuating. It works in all circumstances. It is honest and transparent.

In a world full of celebrities and influencers, constantly portraying the golden standard of living marked ardent consumerism, whereas, minimalism provides simple life that is fulfilling and at same time is attractive and inviting.

  • It is internal reflection through external means

The book ‘Simplify’ by Richard Koch and Greg Lockwood, shares 7 guiding principles to help anyone declutter home and life. This book focuses exclusively on external factors to expedite the achievement of true freedom and sense of blissfulness.

The 7 Simplify Guiding Principles as mentioned in the book;

1) Be Convinced

“Our actions will always follow the true desire of our heart. What our heart believes and loves always determines the path of our life. We can mask our true wants for only a short while.”

  1. This first principle includes 10 benefits of living minimal life:
    1.       Spend Less
    2. Less Stress
    3. Easier to Clean
    4. Freedom
    5. Good for the Environment
    6. Be more Productive
    7. Example for Kids
    8. Financially Support other Cause
    9. Own Higher Quality Things
    10. Less Work for Someone else

2) Make It Work For You

  1. He defines minimalism in 5 aspects, which are: 
    1. “We will intentionally promote the things we most value” 
    2. “ We will remove all clutter from our lives”
    3. “We will decorate in a minimalist style”
    4. “We will use our money for things more valuable than physical possessions”
    5. “We will live a counter-cultural life that is attractive to others.”

3) Jump Right In!

  • “For many, the idea of decluttering their home seems daunting… or even worse. It may be helpful to consider the process more like training for a marathon. You don’t declutter your whole house the first day out… you start with a small, manageable job and build your way up.” 
  • The stress is laid on minimising rather than leveling. The difference between is that. Leveling is just moving clutter to a different level of your house. Minimizing is getting rid of it or finding a home for it.
  • “A general rule of thumb to guide you is, ‘If it isn’t essential, remove it.’”

4) Stop The Trend

“You say, ‘If I had a little more, I should be very satisfied.’ You make a mistake. If you are not content with what you have, you would not be satisfied if it were doubled.” — Charles Spurgeon. The author highlights the importance of smart consumerism through a Curated Spending Plan.

5) Persevere

It is important to preserve the energy while marching towards goal of minimal life and one way it could be done is through “Recognize your ‘Clutter Collection Sites.’”

6) Share The Joy

  • “We were never meant to live life accumulating stuff. We were meant to live simply enjoying the experiences of life, the people of life, and the journey of life – not the things of life.”

7) Simplify Everywhere

  • “What then, are the ‘big rocks’ in your life? Since becoming minimalist, we have been able to identify the big rocks in our lives – our kids, our friends, our faith, our goals, and our influence. Simplifying life is about identifying the big rocks, putting them in the jar, and intentionally eliminating the little rocks.” 
  • Achieving minimalism is possible

Becoming a minimalist is completely achievable, by simply applying practical steps everyday in our life. By incorporating minimalism into our lives, we’ve finally been able to find lasting happiness.

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We are Doctors Risk Medico Legal Services Company Established In 2005, Now Has 15 Years Of Rich Experience In Successfully Solving 15,000+ Cases, Having 10000+ Satisfied Clients From Every Part Of India.

 

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