How to Choose the Right Insurance for Your Assisted Living Facility

As demand for care at assisted living facilities grows, operators have to explore and understand their insurance options. You may need to update an existing policy with custom add-ons or build a completely new program. In either case, a typical commercial plan is rarely enough. Policies designed for the needs of assisted living facilities provide specialized protection in a high-risk industry.

Assisted living insurance is not one-size-fits-all. Below are the best practices for choosing the policies and add-ons that fit your facility, with guidance on how to sort through a complex range of options.

Why do assisted living facilities need specialized insurance?

Between 2023 and 2024, claim severity for assisted living facilities increased approximately 3.7 percent, with a total of around $1.87 billion in losses and indemnities. That rise reflects several industry shifts at once, including an aging population, post-pandemic staffing shortages, and rising injury rates.

Around 1 in 4 adults over 65 experiences a fall each year, causing more than 3 million emergency room visits and over 38,000 deaths annually, with related healthcare costs projected to exceed $100 billion by 2030. That is fall data alone, and assisted living facilities carry a disproportionate share of the burden because of the population they serve. The risk flows through every part of operations, from resident claims to operating costs to insurance liabilities.

The takeaway: assisted living facilities can no longer rely on conventional business insurance. As claim severity and frequency rise, coverage has to be customized to the distinct needs of senior care.

What types of insurance should an assisted living facility buy?

Even operators who know they need protection may not recognize exactly which policies to carry. Because senior care has distinct risks, look for a broker with direct experience in the industry. Each program should be customized, but the following coverages form the structure most well-protected facilities follow:

General liability

The foundation every business carries. General liability responds to third-party claims such as visitor injuries, property damage, and the related legal costs. It is essential, but on its own it cannot protect a facility from care-related risks.

Example: a resident's family member slips and falls while visiting. General liability can cover their medical expenses and any resulting lawsuit.

Professional liability

Professional liability, or malpractice coverage, responds to the distinct care risks operators face, including negligence, care errors, and omissions. Directors and officers coverage is a related layer that protects board members and managers, especially in claims of medical or financial mismanagement.

Commercial property

Comprehensive protection also covers the facility and its assets. Physical damage to the building, grounds, or business equipment should be covered with repair and replacement coverage in a commercial property policy.

Example: a fire can damage the structure and destroy expensive equipment. Without proper valuation and add-ons for high-value machines, claims can be underpaid or denied.

Cyber liability

Assisted living facilities hold sensitive financial, insurance, and medical records. Cyber liability protects against the cost of a data breach and helps fund the response. Stronger digital protections and a clear incident-reporting process can lower both risk and premiums.

The coverages operators most often miss

A complete program usually also includes workers compensation (required by law and driven by resident-lifting injuries), commercial auto for resident transport, business interruption, a commercial umbrella, and dedicated abuse and molestation coverage. Abuse and molestation in particular is usually excluded or sublimited on standard policies, despite being one of the highest-severity claims a facility can face.

How to decide what your facility needs

The right program comes down to a handful of questions: What level of care do you provide, and does it include memory care? How many beds, and what is your occupancy? Do you transport residents? What does your claims history look like? What does your state require? For current pricing by facility size and acuity, see our assisted living insurance cost guide, and for a line-by-line review, the coverage checklist.

Frequently asked questions