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Liability Insurance-Navigate the Maze

By brian barrick
October 31, 2012

Whether run by a corporation with hired staff or a private organization, most states make it mandatory for an Adult Family Home to carry commercial liability insurance. Unfortunately, this kind of insurance is not cheap. To find suitable policies at affordable prices, it helps to know just what liability insurance is all about, and what types of cover will be required for adequate protection.

Basic Purpose of Liability Insurance

Essentially, running an Adult Family Home, you are at a constant risk of someone – such as, for example, an employee, a volunteer, a resident or members of a resident’s family – suing you for damages and/ or injuries, perhaps even death, caused by you, your staff or by an incident on your property.

Liability insurance is designed to financially protect you, your business and potentially your home, by paying any court determined damages, out-of-court settlements and/ or legal costs.

Types of Liability Insurance

There are many different types of liability insurance. Running an Adult Family Home, your policy will need to include:

  • Employer liability (protecting you against claims for potential injury or damages by employees)
  • General liability (covering incidents involving residents, visitors, visiting suppliers, and so on)
  • Liability cover for volunteers working with you

If you do employ nursing staff, professional liability, or malpractice insurance, covering you in case a resident is made ill, injured or even killed as the result of a mistake by your nursing staff will also be required.

Finding Liability Insurance

To find the most cost-effective policy/ combination of policies, it certainly pays to shop around a little before entering a commitment. Most insurance providers offer quotes on line, and, if there are questions you need to ask, staff is typically at hand to advise.

Determining your Premium

It usually helps to have as much information about your Adult Family Home as possible ready at hand when requesting quotes, as this will save both time and effort. Exact details of the questions insurance companies will need you to answer in order to determine your premium rate vary between companies, but most will include the following questions:

  • Number of residents/ licensed beds
  • Amount of time you have been in business
  • Annual income
  • Previous losses at your Adult Family Home
  • Is a policy currently in place?
  • Is your Adult Family Home protected by adequate alarms/ sprinkler system, etc?

Naturally, your premium will also be affected by the chosen limit. The mandatory minimum limit per incident is $500,000, with a total minimum limit of $1,000,000. As it is, you may wish to go above this limit, a choice which is entirely up to you and your available budget.

Risk Assessment

Most providers have staff specifically trained to assist you with questions of risk assessment/ management. In many instances, companies will provide a specialist to make a risk assessment in your property. This individual will advise you on potential risks present in your AFH and how to deal with them.

Risk factors include, among others, safety of electrical equipment; waste disposal procedures; safety of pathways, stairs, e.t.c.; manual handling/ provision of medication training/ procedures, and more.

Studying Quotes

Before making a decision, it is vital to study all of the quotes and compare the types of incident covered, exceptions, the excess you will have to pay in case of a claim with each policy, and so on to ensure you will indeed be adequately covered.

Should there be anything you do not understand, or wish to have explained in more detail, do not hesitate to contact the company in question – their advisers are there to help.

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