AOA in the professional indemnity policy refers to Any One Accident. This means that AOA limit in the insurance policy is set for one or more than one series of claim which may occur due to the same mistake or error in professional given by the policy holder. AOY is the Any One Year of the period of the policy. The policy holder can choose predetermined indemnity in various ratios of AOA (Any One Accident) and AOY (Any One Year). The premium of the professional indemnity is dependent on the AOY (Any One Year) limit chosen by the policyholder. Mostly, the policyholder can choose to set the limit in indemnity in AOA:AOY in the ratio of 1:1,1:2,1:3 and 1:4.
Mainly, AOA (Any One Accident): AOY (Any One Year) ratio decides the maximum liability the insurance company will compensate at the time of professional indemnity claim. If the claim ratio chosen is 1:1 it means the maximum liability the insurer will compensate is equal to the sum insured. If the policyholder chooses 1:2 then the insurer will compensate half of the insured in event of a professional indemnity claim. The other half will be paid by the insurer if a new claim is raised within the same policy period.
Let’s say if a Surgeon has chosen a professional indemnity policy in the ratio of 1:2 for a sum insured amount of INR 10 lakhs. The Surgeon gets charged for a botched surgery and has been ordered to pay INR 7 lakhs to the victim patient. In such a case if the Surgeon submits the claim to the insurance company then as per the ratio the insurer will be liable to pay only INR 5 lakhs and the other INR 2 lakhs has to paid by the Surgeon from his own pocket. The remaining sum insured will be paid by the insurance company if a valid claim is submitted in the same policy year. If the Surgeon had chosen 1:1 ratio then he or she would have received the full INR 7 lakhs claim amount from the insurance company.
Therefore, it is vital to choose the correct limit of indemnity conditional on the risk exposure in the profession. When choosing the limit of indemnity every Doctor or Surgeon must evaluate their client spread, risk of claims and number of claims that may occur in a policy year. With increased customer awareness and rights, it has become imperative for Doctor’s to get themselves safeguarded with the right policy coverage and ratios.