Real-Life Examples Related to Professional Indemnity Insurance Claims in India

Professionals such as lawyers, chartered accountants, doctors, engineers, etc. are susceptible to several kinds of professional risks. These professionals own a duty of care towards their clients. However, in case of negligence, they may face several kinds of repercussions. In order to mitigate such risk, the insurance companies offer a professional indemnity insurance policy. A professional must subscribe to such policies. This includes lawyer's indemnity insurance, doctor's professional insurance, etc.

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Examples Related to Professional Indemnity Insurance Claims in India

One may find several examples related to professional indemnity insurance claims in India. Before looking at such examples related to professional indemnity insurance claims in India, one must understand the origin of such insurance which gave the third party the right to sue an individual or organization for wrongful or negligent advice.

  • Hedley Byrne & Co Ltd v Heller & Partners Ltd 2 AII ER 575

    This case marked the origin and importance of pi insurance. It is a landmark judgment where the professional indemnity policy achieved significant importance.

    Hedley was an advertising firm. It wished to learn the creditworthiness of one of its clients EasiPower Ltd. In order to do so, the firm contacted the bank representing EasiPower Ltd. The bank provided the financial report of its clients.

    The report seemed favorable to the advertising firm. However, the company (client) (EasiPower Ltd.) went into liquidation. Consequently, Hedley had to sue Heller Ltd. (the bank).

    The advertising agency sued the bank for providing misleading statements. However, the bank defended and contradicted the statement of the advertising agency. As per the bank, there was no duty of care owed by the bank to the advertising agency.

    However, Hedley succeeded in establishing a sufficiently proximate relationship with the bank. Hence, the court ruled in favor of the advertising firm. Post this landmark judgment, a third party could sue any person or company for giving negligent advice. The third-party may recover damages for the loss incurred or suffered due to a breach of their duty of care.

  • Amarjit Kaur v Dr. Amita Joshi

    CC/18/640

    Section 11 & 12 of the Consumer Protection Act, 1986

    July 30, 2019

    This is a recent example related to professional indemnity claims in India.

    Brief Facts of the Case

    The complainant along with her husband visited Bhartiya Hospital for a routine checkup of her eyes. The concerned doctor treating the complainant preached to her about the installation of a lens in her left eye.

    However, the complainant did not prefer the installation of a lens in her left eye. Instead, she approached Swastik Eye Care Centre situated in Amritsar. They found Dr Amrita Joshi at the eye care centre.

    The said doctor advised her same to get the lens installed in her left eye. She asked the patient to deposit INR 20,000 for the same.

    However, both parties agreed at INR 16,000. The complainant paid the said amount in advance. Nevertheless, the eye care centre never issued any receipt for the same.

    The complainant was asked to approach the eye care centre the next day. When she reached, the doctor took her to the operation theatre. After 3 hours, she was brought back from the operation theatre. The doctor informed her that some damage has been caused to her left eye while operating the same (Akh Da Parda Phat Gya Hain).

    Some medicine was put into her eye and she was asked to pay a daily visit to the eye care center.The complainant was again operated upon in the hospital. However, due to the lapse and negligence of the doctor, her left eye was completely damaged.

    The complainant noticed no improvement in her eye. She was unable to see anything from her left eye. The complainant approached the doctor and requested to pay INR 18 lakh as compensation for losing her left eye.

    In addition, the complainant wrote several complaints. These were addressed to the Chief Minister, Secretary Health Department and Deputy Commissioner of Punjab and Amritsar.

  • Pleadings of Complainant

    The acts of the doctor amount to the following.

    • Negligence in service
    • Deficiency in service
    • Unfair trade practice

    The complainant in her plea prayed the following.

    • The opposite party should be directed by the court to pay a compensation of INR 18 lakh for the damage caused to her eye
    • The amount must be payable with 12% interest per annum
    • The cost of litigation must be awarded to the complainant
    • Any other relief the court deems fitting be awarded to the complainant
  • Held

    Upon hearing the contention and pleadings of other parties, the Delhi State Consumer Commission held the following.

    • The case proved the medical negligence from the end of the opposite party
    • The opposite party is guilty of negligence
    • The complainant is right in her pleadings

    By taking into account the recent judgment of the Delhi State Consumer Commission named Dr V.N. Shrikhande v Mrs Anita Sena Fernandes, the court stated that recently a private hospital and its doctors were booked for medical negligence. The victim was given INR 19 lakh compensation for medical negligence by the hospital. Further, the hospital was also asked to pay INR 20 lakh to the consumer welfare fund.

    Therefore the consumer commission in the present case directed the opposite party to pay INR 11 lakh. This would be in the form of compensation for causing damage to the left eye of the complainant. Further, the hospital was directed to pay INR 10,000 as the cost of litigation. In addition, the court stated that the doctor shall be at liberty to claim the amount from their insurer under the professional indemnity policy.

Conclusion

A professional may find several examples related to professional indemnity claims in India. Professional indemnity insurance is a vital policy for a professional. It provides coverage against a claim made by a third party. Therefore, a professional individual must subscribe to a PI insurance policy.

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