Page 422 - IC38 GENERAL INSURANCE

5. Professional Liability

Professional indemnities are designed to provide insurance protection to
professional people against their legal liability to pay damages arising out of
negligence in the performance of their professional duties. Such covers are
available for doctors hospitals; engineers, architects; chartered accountants,
financial consultants, lawyers, insurance brokers.

6. Directors' and Officers' Liability Policy

Directors and Officers of a company hold positions of trust and responsibility.
They may become liable to pay damages to shareholders, employees, creditors
and other stakeholders of the company, for wrongful acts committed by them in
the supervision and management of the affairs of the company. A policy has
been devised to cover such liability and is issued to the company covering all
their directors.

7. Employee‘s Compensation Insurance

This policy provides indemnity to the insured in respect of his legal liability to
pay compensation to his employees who sustain personal injury by accident or
disease arising out of and in the course of his employment. This is also called
Workman‘s Compensation Insurance.

Two forms of insurance are prevalent in the market:

a) Table A: Indemnity against legal liability for accidents to employees
under the Employees Compensation Act, 1923, (Workman‟s
Compensation Act, 1923), Fatal Accident Act, 1855 & Common Law.

b) Table B: Indemnity against legal liability under Fatal Accidents Act, 1855
and Common law.

The premium rate is applied on the estimated wages of employees as declared
in the proposal form and premium is adjusted on the basis of actual wages
declared by the insured on expiry of the policy.

The policy may be extended to cover:

i. Medical and hospital expenses incurred by the insured for treatment of
employee injuries, up to specific amounts

ii. Liability for occupational diseases listed in the Act
iii. Liability towards employees of contractors

Test Yourself 11

Under the Public Liability Insurance Act, 1991, how much is the compensation
payable for actual medical expenses?

I. Rs. 6,250
II. Rs, 12,500
III. Rs. 25,000
IV. Rs. 50,000

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