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Professional Indemnity Insurance - Liability Insurance - Basics

Sumeet was interested in investing a lump sum amount in a plan which can provide him a certain level of income per year with a minimum risk of capital loss. So he went to a financial consultant, Akshay, who ran a financial consulting agency, to get some advice. Akshay suggested investing in a particular fund according to Sumeet's requirements.
However, Sumeet did not receive any yearly income from the fund, but in fact, suffered a capital loss during the two year investment period. Akshay has not even provided any updates to Sumeet during the investment period of two years regarding the performance of his fund. Later, Sumeet came to know from other sources that the fund was not performing well at the time of original investment.

Therefore, in this case, it is clear that reasonable judgement was not exercised by Akshay while performing his duty as a professional, which had resulted in big losses to his client. Sumeet filed a case against Akshay for professional negligence and the court awarded compensation to be paid by Akshay to Sumeet. Akshay also had to incur legal expenses in defining his case.

Now, we will discuss what is the standard of duty of care expected from professionals in performing their duty, when does a professional liability arise, how can it be covered under insurance and how do the clauses in professional indemnity policies differ from other liability polices..
  • Need for professional indemnity insurance :- Professional Indemnity insurance policies are designed to provide insurance protection to professional people such as doctors, solicitors, chartered accountants and architects etc. against their legal liability to pay damages arising out of negligence in the performance of their professional duties. In India, the professional indemnity policy is generally given by the insurance companies to those professional:
  1. Who are governed by practices and services as laid down by a statutory organization/body.
  2. Who are answerable to the governing council in the event of failure to adhere to these practices.  
Thus the medical professional governed by the Medical Council of India or the Engineers or Chartered accountants would be issued Professional Indemnity Policies.  All other professionals would be issued Error & Omission policies. 

The need for insurance protection to cover these legal liabilities by professionals is felt due to:
  • The increasing claims consciousness among their clients.
  • More awareness in them about impact of litigation and the high awards in motor third party and other public liability fields nowadays.
  • The fact that the professional people, like everybody else, are prone to commit errors in the conduct of their business and especially in the modern conditions of life which is becoming more difficult and complex.
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Basics of Engineering Insurance - General Insurance (Miscellaneous Insurance)

Engineering Insurance forms part of the miscellaneous branch of insurance in the Indian insurance market. 

In India there is no insurance company dealing only in Engineering Insurance Business, but each of the General Insurance Companies has Engineering Department to look after development, marketing, administration and  conduct of the business.

Each company is equipped with a team of qualified, trained and experienced engineers to actively support underwriting philosophy of the company with a sound technical base.

Classes of Engineering Insurance :- various insurance policies issued by Indian insurance companies in the Engineering department can be classified into the following groups.
  • Construction Phase Insurance :- These policies are normally "Period" or "One Time" policies, i.e. they are issued for the period of  the project. Like..Contractor's All Risks (CAR) Insurance, Erection All Risks (EAR) Insurance also known as storage-cum-erection(SCE) insurance, Marine cum Erection (MCE) insurance, Contract Works (CW) insurance, Contractor's Plant & Machinery Insurance, Advance Loss of Profits (ALOP) or Delay in Start-Up (DSU) insurance.  
  • Operational Phase Insurance :- The Operational phase insurances are "annual" policies renewable at each anniversary. Policies combining both Construction and Operation Phase interests are presently not allowed. Operation Policies are..Machinery Insurance (MI) also knows as Machinery Breakdown (MB or MBD) Insurance, Boiler and Pressure Plant Insurance (BPP), Electronic Equipment Insurance (EEI), Deterioration of Stocks Insurance (DOS), Civil Engineering Completed Risks (CECR) Insurance, Machinery Loss of Profit (following Machinery Breakdown and/or Boiler Explosion) insurance. (MLOP). 
Principles applicable to engineering insurance :- The following basic principles of General Insurance equally apply to all classes of Engineering Insurance business..
  • Utmost Good Faith
  • Insurable Interest
  • Indemnity 
  •  Subrogation and Contribution
  • Proximate Cause
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Basics of Legal Liability - General Insurance (Liability Insurance)



Legal Liability :- In simple terms, legal liability is the legal responsibility of a person to pay compensation for any damages incurred. Legal liabilities are usually determined by the court even if they are settled mutually among the parties outside the court.

Classification of Legal Liability :- Legal liability may be classified into two categories.
1. Criminal Liability :- It is enforced by the state, resulting into punishment in the form of fine or imprisonment or both.
2. Civil Liability :- Here action is brough by one party against another and dealt with according to law, resulting in payment of damages or compensation to the aggrieved party.

Insurance coverage is provided only for civil liability claims. Any liability arising out of criminal act cannot be covered under insurance. 

Civil Liability :-
  • It may arise under common law which may be defined as a body of law consisting of past court decisions, customs and usages recognized by court. Example :- A person may be liable to pay damages to another person under common law for negligently causing bodily injury and/or property damage.
  • Civil Liability may also arise under statutory law, i.e. under an act of Parliament. Example:- Under Workmen's Compensation Act 1923, the employer, irrespective of his negligence, may be liable to his employees who meets with an accident whilst at work.
  • Civil Liability may also arise under a contact between two parties. Example:- A builder has made a contract with the owner to complete his building within a stipulated period. If the contractor fails to complete the building on time, then he has a civil liability to the owner.
Liability Insurance :- It can be classified into two types based on the category of liability covered.
  • Insurance Covering Statutory Liability i.e. liability defined by a specific law example:- Workmen's Compensation Act, Motor Vehicle Act, Indian Steamships Act, Public Liability Act etc. 
  • Insurance Covering Tort Liability i.e. common law judgments Example:- Public Liability, Professional Liability, Product Liability etc.  
Liability Insurance is more commonly classified as :
  • Property and Casualty Liability i.e. acts of negligence resulting in loss or damage to property or death or injury of third party.
  • Financial Liability i.e. negligence resulting in financial losses to third parties e.g. Professional Liabilities, Directors and Officers Liability etc.
The purpose of liability insurance is to provide indemnity to the insured in respect of the financial consequences of legal liabilities. The damages or compensation may become payable whenever any such liability arises under the law.
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United India Insurance Company Limited withdrawn of Top Up Medicare Policy



HO: HEALTH: CIR: 07: 2020-21 30.06.2020 

RE: WITHDRAWAL OF TOP UP MEDICARE POLICY 

Our retail health product ‘Top Up Medicare Policy' shall be withdrawn with effect from 01st October 2020 and will no longer be available for renewal thereafter. 

In view of the above, Head Office has initiated the following action: 

1. Arranged for sending text message and Email to all the existing policyholders of Top Up Medicare Policy, at their mobile numbers/ Email address available in our records, informing about the withdrawal of the product. The dispatch of these messages/ Emails shall commence on or before 01.07.2020. 

2. Arranged for generation of a letter at policy-issuing office to be sent to all the policyholders of this product. The link for generating these letters will be intimated to all operating offices separately through email All the operating offices must immediately print the letters, using the link provided to them, for all the existing customers of this policy and arrange to dispatch the same through recorded delivery and maintain the dispatch records meticulously for future use. 

3. Arranged for display of message regarding withdrawal of Top Up Medicare Policy on our website and also provide a link to the letter to all the existing policyholders regarding withdrawal of the product. 

4. Arranged for publication of notice regarding withdrawal of these two products in two national daily newspapers. The notice will appear in all editions of 'The Times of India' and 'Dainik Bhaskar' on 01.07.2020. 

5. Informed HO IT to initiate all measures to block issue of fresh Top Up Medicare Policy in our software w.e.f. 01.07.2020 and block the renewal also w.e.f. 01st October 2020. However, necessary arrangement will be made in GC core for migration of Top Up Medicare policies to Super Top Up Medicare Policy'. Necessary changes are also being made in the renewal notice for this product. 

The above measures are being undertaken so that all the existing customers are properly informed well in time and the migration process is hassle-free. This is also in accordance with the Regulations. 

Further, please note that in case, the renewal of Top Up Medicare Policy is due between 01.07.2020 to 30.09.2020, at the time of renewal, the policyholder shall be provided an option of renewing his/her Top Up Medicare policy at existing terms, conditions, and premium rates for only one more year. No subsequent renewals shall be permitted as the product ceases to exist w.e.f. 1st October 2020. 

Alternatively, the policyholder has an option to migrate to ‘Super Top Up Medicare Policy’ at an equal Sum Insured. Please note that after migration to Super Top Up Medicare Policy, the premium rates, guidelines and policy terms and conditions of Super Top Up Medicare Policy shall be applicable. Suitable credit of continuity/waiting periods for all the previous policy years would be extended in the new Super Top Up policy, provided his/her existing Top Up Medicare policy has been maintained without a break. 

In case, the renewal is due on or after 1st October 2020, he/ she has to necessarily migrate to ‘Super Top Up Medicare Policy’ at an equal Sum Insured as the product ceases to exist from 1st October 2020. 

Please ensure dispatch of the letters to all the existing customers and also assist them in migration of their policies. 

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