Optimizing Underwriting for Home Health Care Providers

Health care business owners and managers often handle various tasks simultaneously. You’re responsible for your patients, your employees and running your business in general. The past few years have added even more to juggle with the COVID-19 pandemic, Medicare and Medicaid changes, staffing shortages and supply chain issues.

With more than 34 years of underwriting experience in the home health care and hospice space, I would like to offer some insight into ways you can protect yourself and your business during these unprecedented times.

The home health industry is unique. Most services are provided in patients’ homes, assisted living facilities, nursing homes or other venues, including mall clinics, health care offices or health fairs. It’s important that you secure a policy that provides coverage for your business and your staff, no matter the location of the job.

Who Is Covered?

A business owners’ policy (BOP) will usually not work for home health care businesses. Most BOPs don’t provide coverage for services provided at the patient’s residence. Therefore, most insurance carriers write general liability coverage instead of a BOP for a home health care provider. It’s also recommended that you place your professional liability (PL) policy—sometimes referred to as medical malpractice coverage—with the same insurance carrier that writes your commercial general liability (CGL) policy. This avoids a “gray area” between insurance carriers/policies that can occur when you have professional liability insurance with one carrier and general liability insurance with another. Both policies may exclude coverage for an exposure they believe the other policy should cover. If you carry PL and CGL coverage with the same carrier, you can help avoid “gray area” issues.

Types of Frequent Claims

Some of the more frequent home health care provider claims are triggered by abuse, falls, burns, and nonowned and hired auto liability. Let’s look at some examples and talk about policies that could apply to each.

1. Abuse

This represents an allegation of physical or sexual abuse by a patient against one of your employees. There are two things to keep in mind—defense and indemnity. When an employee is accused of abuse, make sure you have coverage defending your agency and employee against the abuse allegation, which can be damaging to your reputation and your bottom line. It is important that your agency has enough coverage to defend the claim and pay out a settlement or judgment.

Be aware, many abuse and molestation policies provide a low policy limit for this type of claim. If you carry professional liability and general liability coverage with limits of $1 million and your abuse and molestation coverage is only for $100,000, you may not be adequately insured. Is $100,000 enough money to defend and indemnify against this type of claim? Also, what types of exclusions apply? Some policies will provide defense coverage, but not cover the actual abuse itself. These claims can be very expensive to defend. Furthermore, if your employee abused one patient, you may find out in discovery that they also abused others. This will add more cost to both defend and indemnify this claim as it will still be considered the same claim—even though there are more victims.

2. Falls

Fall claims are common across all segments of the health care industry. Patients frequently fall while navigating their way to the bathroom or getting in or out of bed. The allegation in these claims is usually negligence or neglect on the part of the caregiver. This type of claim is usually covered under your professional liability policy. If your insurance agency notices that you’ve had an increase in fall-related claims, it may be time to conduct training with your staff and consider expanding your home visit checklist. Your insurance carrier will often have helpful risk management tools to share with you focusing on fall-related claims prevention.

3. Burns

This claim is frequently seen with patients needing assistance with daily living. For obvious reasons, elderly patients are more susceptible to severe burns. This is another claim that is generally covered under a professional liability policy, as the allegation is negligent care (i.e., failure to check the temperature of the bath or shower water or heating pad or hot water bottle, or failure to monitor and supervise the patient, resulting in injury). The frustrating part is that it’s preventable. Proper training of your staff to check the temperature of water can help reduce these claims.

4. Nonowned & Hired Auto Liability

Home health care agencies often require employees to operate their own vehicles while working. Generally, employees are required to drive to clients’ homes throughout their workday. While some larger agencies may provide company-owned vehicles for business use, many cannot afford to maintain a fleet of company autos.

A written risk management policy for nonowned and hired auto liability should state the minimum expectations for each employee who operates a vehicle while on company business, including:

• Driver qualifications: Guidelines need to be set establishing what your agency considers a “qualified” driver. Drivers will need a valid driver’s license in your state. A motor vehicle report should be obtained as part of the hiring process and reviewed annually.
• Insurance: If employees are driving their own vehicles for business use, you’ll want to require they carry auto liability insurance that meets or exceeds the minimum limits required in your state. Because these employees are using their vehicles for work, they should request their auto insurance carrier attach a “business use” endorsement to their auto policy.
• Driving policies: Are employees allowed to provide client transportation services? If so, how far can they drive patients?
• Accidents: Be sure to set up a reporting policy for any accidents. Details of all accidents should be reported to you immediately. A standardized accident report should be created for all drivers.

5. Additional Insured

An additional insured person or organization added by endorsement to a liability insurance policy is considered an insured person under that policy and therefore can enjoy the benefits provided by that policy. Typically, the coverage only applies to claims brought against the additional insured for liability created by the named insured’s act or failure to act. This means the additional insured endorsement would not likely afford any coverage for a claim brought against the additional insured for their own act or failure to act.

Liability insurance policies are designed to provide protection for organizations and individuals for sums they are legally obligated to pay as damages to others. There is typically coverage for defense costs and other sums that may be within or in addition to the policy limits. There are, however, many variables affecting how coverage applies from one policy to the next.

A good insurance agent and/or broker can help you find the right insurance carrier and policy for your business and exposures. Keep in mind that your insurance carrier may have resources available to help you understand your risks and share products to either transfer the risk to them or to reduce exposures with risk management tools. Don’t be afraid to ask for access to any risk management services and products they can provide to you as helpful resources.