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.