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Professional Indemnity Insurance for Doctors

Written by

Shaun McGowan

Professional indemnity insurance for Doctors (also known as medical indemnity, practice indemnity or malpractice insurance) is a legal requirement if you wish to register to practise medicine in Australia.

The legislation requiring Doctors to have adequate professional indemnity insurance cover was brought in to protect both Doctors and their patients. Its purpose is to make sure that there are funds available to pay adequate compensation should you make a mistake in your diagnosis or treatment of a patient. Since the consequences of a mistake could be very severe, leading to permanent disability or even death of a patient, the damages awarded against you in a successful negligence claim could be hundreds of thousands of dollars, or more.

Claims against you could include:

  • You made the wrong diagnosis, leaving the patient’s true condition undiagnosed and negatively impacting the outcome for the patient.
  • You failed to follow up on test results that indicated the patient had a condition requiring treatment.
  • You prescribed or administered an inappropriate treatment, causing harm to the patient.
  • You failed to give a patient due warning of all the risks involved in a treatment or procedure and to get their informed consent.
  • You made a mistake during a procedure or in the dosage of a treatment, causing harm to the patient.
  • You were negligent in your after-care of the patient, causing them harm.

As a Doctor you also have a very strict duty of confidentiality to your patients. If you (or one of your employees) shared personal information about one of your patients or their medical status with a third party without their permission, the consequences could be severe both for them and for you.

Why do Doctors need professional indemnity insurance?

In order to register with Medical Board of Australia (a legal requirement if you wish to practise as a Doctor in this country) you will be required to confirm that you will hold professional indemnity insurance cover with an approved insurer for the duration of your registration period. The rules and requirements for medical indemnity insurance are set out in the Medical Indemnity (Prudential Supervision and Product Standards) Act 2003, which applies in all States and Territories of Australia.

To meet the required standards your policy must have:

  • A minimum of $5,000,000 insurance cover.
  • Cover for each individual medical specialism in which you practise.
  • The option of unlimited retroactive cover, to protect you against claims made relating to medical services you provided prior to taking out the insurance.
  • The option of run-off cover, to protect you against claims relating to services provided during the period when your policy was in place, but filed after your cover lapses.

If clients are unhappy with the outcome of a treatment they may seek to take legal action against you, even if this is unjustified. Professional indemnity insurance also covers your legal costs if you need to defend yourself against unfounded claims, so you can protect yourself against serious damage to your reputation.

What does professional indemnity insurance cover?

Public liability insurance covers you if a patient has an accident at your clinic, or if you accidentally injure someone else or cause damage to their property (for example, if they trip over your bag). But public liability insurance won’t cover you for against claims of professional negligence should you cause physical or financial harm in the course of performing your services. For this you need professional indemnity insurance.

Professional indemnity insurance covers both your legal costs if you need to mount a defence against a negligence claim (whether or not that claim is upheld), and any damages that are awarded if a claim against you is successful, up to the limit of your policy.

Since medical malpractice or negligence claims can be made years after the initial diagnosis or treatment, retroactive and run-off cover give you vital extra protection.

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How much is professional indemnity insurance for Doctors?

How much you pay for your medical indemnity insurance will depend on on a number of factors, such as:

  • How much cover you want to take out
  • What kind of medical services you offer. You will need cover for each specialism or area of practise.
  • The annual turnover of your practice
  • Where your practice is located (you will pay different levels of stamp duty in different states)
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Professional indemnity insurance case study

A Cosmetic Surgeon performed a rhinoplasty procedure to correct what the patient perceived to be defects in the shape of their nose. A week after the surgery the client contracted a serious infection, which led to chronic sinusitis. The sinusitis failed to respond to treatment and ultimately required costly additional surgery.

The patient filed a negligence suit against the Doctor for the cost of the additional surgery, claiming that the infection was caused by poor after-care following the procedure and that the Doctor had failed to advise him of the risk of serious sinus infection prior to the surgery.

The negligence claim was dismissed, as the Doctor was able to prove that the patient had been given a booklet listing all the risks in detail, and that the patient had signed a consent form indicating that they had received and understood this information. It was also found that the Doctor had given the patient clear instructions on the care of the wound, which they had not followed on returning home after the surgery.

The Doctor incurred $26,000 in legal costs in defending the unsuccessful negligence claim, which were were covered by his professional indemnity insurance. The excess payable on the claim was just $[xx].

List of medical services that need professional indemnity insurance

To practise as a Doctor in Australia you must be registered with the Medical Board of Australia. It is a legal requirement and a condition of registration that you take out adequate professional indemnity insurance before offering your services in any field of medicine, including:

  • Audiology
  • Allergy
  • Anaesthesiology
  • Cardiology
  • Cardiovascular surgery
  • Cosmetic surgery
  • Dermatology
  • Endocrinology
  • ENT
  • Family practice
  • Gastroenterology
  • Gynaecology
  • Haematology
  • Herpetology
  • Immunology
  • Internal medicine
  • Nuclear medicine
  • Neonatology
  • Nephrology
  • Neurology
  • Neurosurgery
  • Obstetrics
  • Oncology
  • Orthopaedic surgery
  • Pathology
  • Paediatrics
  • Pulmonology
  • Radiology
  • Reproductive Endocrinology
  • Rheumatology
  • Surgery
  • Thoracic Oncology
  • Urology

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About the Author

Shaun McGowan from money.com.au

Shaun

McGowan

Shaun McGowan

Shaun is the founder of Money.com.au and is determined to help people pay as little as possible for financial products. Through education and building world class technology. Previously Shaun co-founded CarLoans.com.au and Lend.

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