Understand coverages & levels of protection
by Tracey Crockett
June 18, 2019

Every day, home health care, non-medical homecare, home medical equipment (HME), assisted living and allied health care business owners seek the insurance coverage necessary to meet state and local governmental and licensure insurance requirements.

Typically, the insurance professional will ask a few questions about the business, request the completion and return of several applications, and, after some emails and phone calls back and forth, eventually provide the requested insurance coverages with the submission of payment and signed applications.

Mission accomplished, right? On the surface, the answer is “yes” because the business owner got the insurance coverage they needed. But in reality, it’s a “no,” because, although they have insurance, they are missing the following key information:

  • An understanding of the coverages they purchased and why they were required;
  • An understanding of what each coverage does, who can file a claim, and how the policy works in the event of a claim; and
  • An understanding of how each coverage helps them protect their personal and professional assets and reputation.

Let’s face it: most people hate the idea of buying insurance. And sadly, having insurance doesn’t mean much if the insurance company refuses to pay a claim because it is excluded in a policy that was never fully explained. On the other hand, there are quite a few people who wouldn’t be caught dead without insurance because they realize it is much like a savings account: if you invest in it regularly, it will be there for you in the event of a catastrophe that could severely impact your way of living, your family and your business.

If you’ve read this far, you’re probably one of the few who wants to “get” insurance so you can make an informed decision on how and when to use your protection. Here is a short overview of the types of insurance coverage considered to be best practices for home health agencies and other health
care businesses.

1. General Liability

This coverage protects the business owner in the event of a loss to a third party due to business operations.

General liability coverage steps in to pay bodily injury and property damage claims, personal injury and advertising injury, and fire and water legal liability claims. In simple language, this coverage pays for damage or injury to things owned by non-employees or clients.

Here’s an example: A caregiver is preparing a meal for a client and unintentionally sparks a grease fire in the kitchen when the client starts calling for help from another room. The aide drops everything and, before they know it, the kitchen is engulfed in flames. Property damage to the home would be covered under this policy.

Another example of when this policy steps in is if a vendor visiting your office slips on the entry rug, hits their head a table, and gets a nasty cut that requires stitches. This policy would pay for their medical treatment and, if they sued the company, it would defend your company to the extent of the policy’s defense limits and pay any settlement fees up to the limits of the policy.

2. Professional Liability

Also known as “Errors and Omissions,” this coverage protects your business in the event it is sued for professional negligence, not completing a promised service, or providing poor service that causes harm to the client.

In other words, professional liability coverage steps in if there is a claim due to improper care (error) or a lack of proper care (omission). For example, if a caregiver leaves a client unattended for several hours to run a trivial personal errand and the client falls out of the bed trying to reach the bathroom, this could result in a claim.

3. Abuse & Molestation

This coverage provides protection in the event a client alleges any form of abuse, including sexual abuse. This coverage provides legal defense and payment of damages if awarded up to the policy limits.

For example, a bedridden patient is bruised and has welts and bedsores. The family says that the caregiver is physically abusing their loved one and is not properly caring for and cleaning them. They file a lawsuit against the business claiming bodily injury, negligence, and mental and emotional distress. This policy steps in to defend the business and will pay damages if awarded, up to the policy limits.

4. Hired & Non-Owned Auto

This coverage will protect the business if it is sued due to an employee’s or independent contractor’s involvement in an auto accident in their personal vehicle while on official business for the company.

This coverage steps in after all other valid and collectible insurance owned by the employee or independent contractor pays out. Typically, losses under this coverage occur when an employee or independent contractor is driving from one client’s home to another or is transporting a client to doctor’s appointments, to run errands, etc. These claims are due to a car accident resulting in bodily or property damage to a third party and/or the client. Without this coverage, the business owner would be required to pay all legal defense costs if sued and any damages awarded out of pocket.

5. Crime

Crime coverage protects a business’s assets and reputation if a client alleges that an employee or independent contractor stole or broke their personal property (employee dishonesty), committed forgery or alteration of financial instruments, computer fraud, robbery and more.

6. Employment Practices Liability

This coverage protects businesses in the event of claims and lawsuits filed by former, current and potential employees or independent contractors for employment-related issues such as discrimination, wage and labor disputes, harassment and more.

Depending on the policy form, this coverage can be extended to anyone who has the responsibility of hiring and firing—such as directors and officers—as well as the corporation.

Think about the #MeToo movement. If your business has employees or independent contractors, this coverage is highly recommended.

7. Workers’ Compensation & Employer’s Liability

This coverage provides protection for business owners in two ways: first, the employer’s statutory responsibilities under workers’ compensation laws and second, liability arising out of work-related injuries, accidents and disease to employees and/or independent contractors that do not fall under the first category.

This coverage provides limited compensation to the injured employee or independent contractor and covers the costs of medical expenses, including treatment, prescriptions, rehabilitation, etc. Workers’ compensation coverage is mandatory in every state but Texas. Thus, if an employee and/or independent contractor is injured on the job, but this coverage is not in place, the business owner could be held personally liable for damages.

People say that “knowledge is power” and “what you don’t know can’t hurt you;” I disagree. If you never apply the knowledge you have, there is no gain. And in the insurance arena, what you don’t know can cost you thousands of dollars, your livelihood and your business. The business owner who takes the time to understand insurance solutions and apply that information to protect their personal and business assets and reputation is the one with the power.