Common Misconceptions Doctors Have About Indemnity Insurance

- By Team Policy Era

Debunking Medical Insurance Myths

Medical indemnity insurance is one of the most essential risk management tools for doctors. Yet, despite its significance, many healthcare professionals either misunderstand it or consider it unnecessary. In an era of increasing litigation and heightened patient awareness, these misconceptions can leave a doctor vulnerable, both financially and professionally.

This article addresses the most common myths doctors hold about indemnity insurance, clarifies what it truly covers, and demonstrates why it is indispensable for every medical practitioner.

Understanding Indemnity Insurance: A Quick Overview

Before addressing the misconceptions, let’s establish what indemnity insurance is. In simple terms, medical indemnity insurance is a liability cover that protects healthcare professionals against legal claims made by patients for alleged negligence or errors in treatment.

Unlike general insurance policies, indemnity cover is designed specifically for situations where a doctor faces legal proceedings for professional reasons. It ensures that the financial burden of legal defence and compensation does not fall entirely on the practitioner.

Yet, despite its importance, myths surrounding this policy continue to circulate. Let’s debunk them one by one.

1. Clarifying What’s Actually Covered

One of the biggest misconceptions doctors have been assuming indemnity insurance only applies in extremely specific cases, or that it offers blanket coverage for all kinds of claims. Neither is true.

A standard medical indemnity policy typically covers:

• Civil liabilities arising from medical negligence claims – If a patient alleges harm due to an error, omission, or mistake in treatment, indemnity insurance steps in.
• Legal defence costs – Lawyer fees, court expenses, and other legal charges can be prohibitively expensive. Indemnity cover handles these costs.
• Compensation awarded by courts or consumer forums – If the court rules in favour of the patient, your insurer pays the damages (within policy limits).
• Errors during routine practice – Even small mistakes in prescribing, diagnosing, or documenting can lead to lawsuits.

However, here is what is not covered, which many doctors assume is included:

• Criminal acts or wilful negligence – Any intentional harm or criminal charges under IPC are outside the scope.
• Practising without proper qualification or registration – If you lack valid registration or practice outside your speciality without declaration, the insurer will reject the claim.
• Cosmetic or elective procedures (unless disclosed and approved by the insurer).
• Defamation or reputation damage beyond legal defence – The policy covers your legal battle, but not PR expenses.

Why does this matter?

Because misunderstanding coverage leads to false security. A doctor assuming “everything is covered” may be in for a rude shock when a claim is denied. Always review your policy inclusions and exclusions carefully.

2. The Myth of “I Don’t Need It”

This is the most dangerous misconception: “I’m an experienced and careful doctor; I’ll never need indemnity cover.”

Here is the truth: even the most skilled doctors can be sued. Litigation is not always about actual negligence; often, it’s about perception. A dissatisfied patient or family member can file a case, and the legal system will require you to defend yourself—whether or not you are guilty.

Why this myth persists:

• Many doctors believe lawsuits happen only in big hospitals or metro cities.
• They think “small clinics” or “low-risk specialities” are safe zones.
• They assume “goodwill” and strong patient relationships protect them.

Reality check:

• Rising consumer awareness and legal activism in India mean even minor dissatisfaction can lead to complaints under the Consumer Protection Act.
• Documentation errors, not treatment mistakes, are a common reason for litigation.
• Compensation amounts awarded by consumer courts have risen significantly, sometimes reaching crores.

In short, indemnity insurance is not about negligence; it is about protection from unexpected legal challenges.

3. Real-World Examples of Misunderstandings

To understand how these misconceptions play out in reality, let us look at a few cases:

• Case 1: The Criminal Charge Confusion
  A surgeon faced charges under the IPC (now BNS) after a patient’s death during surgery. He believed his indemnity policy would cover criminal proceedings. It didn’t. He ended up spending over ₹15 lakh on his defence.
• Case 2: The Hospital Cover Myth
  A general physician practising in a corporate hospital assumed the hospital’s group indemnity policy covered him. When a patient filed a negligence case naming the doctor personally, the hospital’s policy refused liability. The doctor had to arrange his own legal defence.
• Case 3: The Small Clinic Assumption
  A paediatrician in a small town skipped indemnity insurance, thinking lawsuits were rare in rural areas. A single case of delayed diagnosis led to a claim of ₹40 lakh. He had to mortgage property to pay compensation.

These are not rare incidents; they are happening more frequently across India.

4. The Cost vs. Value Equation for Doctors

Another common misconception is: “Indemnity insurance is expensive.”

The truth? It is surprisingly affordable compared to the risk it covers. Here is a perspective:

• The average annual premium for a basic cover range from ₹3,000 to ₹15,000, depending on speciality and sum insured.
• For high-risk specialities like surgery or anaesthesia, even a ₹50 lakh cover is often under ₹20,000 annually.

Compare that with the cost of a single legal case:

• Lawyer fees: ₹2–10 lakh
• Court costs and expert witnesses: ₹50,000–₹5 lakh
• Compensation (if awarded): ₹10 lakh to several crores.

When you weigh the tiny annual premium against the financial and emotional burden of a negligence claim, the value of indemnity insurance becomes clear.

Think of it this way: skipping indemnity insurance to save a few thousand rupees is like driving without brakes because fuel is expensive, the risk far outweighs the savings.

5. Why Misconceptions Can Ruin Careers

Apart from financial loss, litigation affects a doctor’s mental health and reputation. Court cases often drag for years, leading to stress, anxiety, and professional setbacks. Media trials can damage trust, even if you eventually win the case.

Indemnity insurance cannot erase the stress, but it can ensure you are not bankrupt and have the resources for a strong legal defence.

Final Word: Debunking the Myths for Good

Misconceptions about indemnity insurance often stem from a lack of awareness or overconfidence. But as litigation risk rises, every doctor, whether a fresh MBBS graduate or a senior consultant, needs this protective shield.

The key takeaways:

• Understand what your policy covers and does not cover.
• Do not assume you are immune to lawsuits. Even the best doctors face claims.
• Do not rely solely on hospital cover or informal assurances.
• View indemnity insurance as an investment, not an expense.

A small premium today can safeguard your practice, savings, and peace of mind tomorrow.