Reviewing Your Insurance Coverage: It’s a Good Policy

ATLANTA — The thing about insurance is that you know how
good it is only when you need to use it. So, in the wake of recent
tornadoes, fires and floods, how good is your insurance?

It’s a question HME companies should be asking, perhaps even
more so than other small businesses, according to insurance
experts. Although HME providers have some commonalities with other
commercial businesses, they also have some unique insurance
needs.

For example, when disasters occur, providers still need to
service their patients. They have ownership of and responsibility
for equipment that is not on their property but in the hands of
patients who might be some distance away from the provider’s
location — perhaps where a disaster has struck.

Even in normal times, HME companies sell or rent items that
often must be delivered into the home and require the delivery
technician to give instructions on their use. So while every
provider needs to carry liability and property insurance, there are
other considerations.

“Take a couple of hours and do an insurance review every year,”
advised Warren Freeman, CFP, FFSI, director of sales and marketing
for VGM Insurance in Waterloo, Iowa. “It can be time so well
spent.”

Although coverage is very individualized in terms of both type
and cost, Freeman said, there are some general points to consider.
What is the actual value of your property and its contents? Freeman
advises having it evaluated periodically to ensure proper coverage
because values do fluctuate. Be sure to include inventory in a
warehouse and/or a retail setting, he added.

“You don’t want to be under-insured and you don’t want to be
over-insured,” Freeman said. “If you are a provider and you are
down in Alabama and a tornado hits and you had 100 pieces of
equipment that were leased out in the community, you want to make
sure you have coverage for that [equipment].”

Brandy Armstrong, program manager for HOMed insurance, offered
by McNeil & Co., Cortland, N.Y., said providers should also
consider taking out coverage for loss of income.

“Say your building burns to the ground and you have to move
somewhere else and start over. The contents and property might be
covered, but where do you get the money to relocate and pay your
employees? How do you keep servicing your oxygen patients?” she
asked. “Think about what would it mean if you couldn’t operate out
of your [current] location.”

Neither should providers overlook professional coverage, which
is useful when, for example, a patient is injured in using medical
equipment and files suit.

While some smaller providers may think they don’t need such
coverage because they do not have, say, a respiratory therapist or
a nurse on staff, Armstrong said, “a ‘professional’ could be
someone explaining something about the equipment and using the
device.”

According to Marie Gaudette, vice president for health care
programs, Smith, Bell & Thompson, a division of Willis North
America, Burlington, Vt., location also can have a direct effect on
insurance coverage.

“For any HME provider located where wind is an issue —
Florida, Louisiana, the five boroughs of New York, anything coastal
in California and the Northeast, and South Carolina specifically
— most insurers are putting a high wind and hail deductible
[on policies]. That is because of the catastrophic losses that have
happened over the last five years. So providers really need to be
aware of where their properties are and what their property values
are.”

Gaudette also advised making sure there is a business
continuation plan in place.

“That would be for any catastrophic event, including terrorism.
[Providers] need to be thinking of things beyond just their
building,” she said.

For more on reviewing insurance coverage and disaster
preparedness plans, see “Time to Do a Disaster
Review,” available online and in the July 2011 print
edition.