Should a chartered accountant buy professional indemnity insurance?

-Name withheld on request

Professional indemnity insurance is meant for professionals like you. The policy is meant to protect the professional from lawsuits due to professional negligence. Claims could come from clients or anyone who acted based on her advice or a published report. Such claims aim to recover financial damages suffered by the complainant. During this litigation process, the professional incurs various costs. In case the court decides against the professional, then the damages awarded by the court would be an additional cost. Both these costs are payable under the policy.

Often, even if the case does not have merit, the professional still incurs litigation costs. This itself can cause huge financial strain on the professional. So, irrespective of the stage of the firm’s journey, it is recommended to maintain professional indemnity insurance. You may consider starting with a small sum insured and gradually enhance it based on increase in client exposure.

As a company, can I maintain two group health insurance and life insurance policies for my employees? Through one policy, I want to offer an equal sum assured to all employees. Thereafter, for the senior employees, I want to offer an additional sum assured. How would the claim process work in such cases?

-Name withheld on request

If you want to offer a differential sum assured to employees, you need not maintain two separate policies. Within the same policy, you can offer grade-wise sum assured. For each grade or range of grades, a sum assured can be defined. You would get more efficient pricing if you buy one policy with graded sum assured, rather than separate policies for each grade.

In case, there are two separate policies, then the claim treatment would be different for health and life policies. In the case of life insurance, both policies would get triggered immediately. On the death of an employee, you can claim from both the policies and pay to the nominee. In the case of health, the claim would be admissible only under one policy. Only the residual unpaid bill from one policy can be claimed in the second policy. You can choose to divide a health claim over multiple policies in whichever proportion you desire. However, the same amount cannot be claimed twice.

Abhishek Bondia is principal officer and managing director at SecureNow.in.