Commercial Insurance Checklist for Assisted Living Facility Operators

Assisted living facility operators shoulder complex responsibilities. The residents of assisted living facilities and their loved ones trust their operators to provide care, which includes maintaining the right insurance to protect the facility and its residents. How can operators customize their policies in a proactive approach to the various eventualities they encounter? Coverage gaps can become costly liability issues without sufficient and updated coverage.

This article offers facility operators a checklist to strategize their assisted living insurance plans to meet their facility’s needs, maintain their reputations, and protect their residents.

1. Building and Property Coverage

Protecting the building and its property should be a significant focus of an operator’s commercial insurance checklist, including five core protections:

• Protection for main and auxiliary structures and any outdoor equipment
• Coverage for major causes of damage, such as fire, vandalism, theft, weather damage, and water damage
• Replacement cost coverage for buildings
• Coverage for equipment and appliances

All structures on the property need to be protected so that facility operators can recoup costs and resume operations as soon as possible. Replacement cost coverage provides compensation for the real-world value of replacing the structure. The alternative, known as actual cash value, factors in the structure’s depreciation, often leading to replacement costs that far exceed the insurance company’s payout.

2. General Liability Coverage

Assisted living facility owners must protect their residents from the costs of injuries; they must also make sure their properties are reimbursed for any damage resulting from these incidents. This includes covering injuries sustained by visitors as well. A single uncovered slip-and-fall accident can cause medical and legal liability, property damage, and reputational harm.

General liability coverage should provide sufficient liability limits for bodily injury claims, especially since assisted living facilities house a vulnerable population and receive so many visitors. Coverage should extend to common and outdoor areas used by residents, as well as visitor areas, parking lots, and any other part of the property where someone could get hurt.

3. Professional Liability Coverage

Assisted living facilities face distinct challenges, including claims of malpractice. Maintaining professional liability insurance protects the facility and its owners from the cost of these claims. Also known as malpractice coverage, these policies cover errors caused by staff, payouts for negligence claims, and other costs related to professional misconduct. As part of their liability checklist, operators should make sure this coverage extends to all types of employees at their facility, including volunteers.

4. Business Interruption Coverage

An assisted living facility can close for many reasons, including repairs related to storm damage, investigations after a serious accident, or as a precaution following a claim of malpractice. When this happens, the facility may need to temporarily close, providing facility transfers or temporary living to residents while resolving the current situation.

During this time, the facility will not be collecting its residents’ fees or onboarding new residents. This loss of income can be covered by business interruption coverage, provided the circumstances of the closure match the terms of the policy. Operators should add interruption coverage to their checklists, especially in areas with frequent weather challenges, since standard policies may not include it.

5. Commercial Auto Coverage

Facility operators should include their vehicles on their business insurance checklist, even if the vehicles have individual auto policies. If any vehicles are used for company needs, such as transporting residents or supplies, the physical damage and liability coverage on the vehicles’ auto policies likely won’t cover them. This is true for vehicles owned by the facility operator, their employees, and any volunteers as well.

Add “Hired & Non-Owned Auto Insurance” to the checklist to keep track of every vehicle not owned by the business, making sure they’re covered by the facility’s commercial auto policy in case they are used for a business-related purpose.

6. Cyber Liability Coverage

In modern assisted living operations, on-site servers often store sensitive resident data, including payment information, personal details, medical records, and more. If a data breach causes this information to leak, the facility could be liable for personal, professional, and legal damages.

Cyber liability coverage can cover the costs of legal defenses and fines that may follow a cyberattack, in addition to recouping the costs of reputational damage. Additionally, credit monitoring services may be necessary for residents and employees affected by the breach, which can be costly without coverage.

7. Workers’ Compensation Coverage

Workers’ compensation coverage is mandatory for assisted living facility employees, and operators should make sure their coverage meets state-specific compliance requirements. Typical workers’ comp insurance covers costs related to injuries, slips, and illnesses.

For example, if a caregiver lifts a resident the wrong way and hurts their back, they may need to take off work, see a doctor, buy medication, or change their work schedule. These costs, including lost income, would be covered by workers’ comp policies without a costly legal battle between the facility and its employee.

8. Umbrella Coverage

Umbrella coverage provides additional coverage beyond the liability limits of other policies, including general liability and professional liability. Add umbrella or excess liability insurance to the checklist to cover anything else the facility needs in addition to the policies already mentioned.

Protect Your Facility with Custom Insurance Plans

Some types of assisted living facility insurance are required by law, while other types protect facilities, assets, residents, and owners from damage and injury-related costs based on the facility’s specific risk profile. In the assisted living industry, liabilities related to malpractice, mismanagement, and workers’ compensation can cause reputational damage as well as legal repercussions. Any insurance checklist should also include provisions for industry-specific challenges.
At Pro Insurance Group, our knowledgeable team customizes insurance plans to help assisted living facility operators protect their properties, assets, residents, and reputations from harm. Contact our team today to learn what insurance your assisted living facility should be carrying and how to customize the coverage for your needs.