Care Home Insurance can vary dramatically depending on which Insurer your policy is placed with. While policies may seem very similar from Insurer to Insurer there can be significant differences in the details so it is important that you read your quote documentation carefully before making a decision. If you do not read your policy wording carefully and fully understand the product you are purchasing before agreeing to go on cover, you may find yourself underinsured or worse still not covered when it comes to making a claim.
While the cheapest policy may seem like the most attractive in the current climate this should be weighed carefully against several other factors before a decision is made, any one of which may cause you to reject your first consideration in the best interests of your business.
Price is an important part of any consideration but the old adage of ‘you don’t get a Rolls Royce for the price of a Mini’ applies to insurance as much as any other product or service and you should consider the breadth and depth of the cover being offered, the security of the Insurer (who you would expect to have the wherewithal to pay claims) and the knowledge and standards of the broker you are considering appointing to act on your behalf.
The last few years have been particularly turbulent within the Care Insurance sector for a few reasons:
- A number of established Insurers such as Ecclesiastical and Hiscox opting to withdraw from offering insurance to the private care sector.
- The short term emergence of Insurers who have offered premiums at unsustainable levels and ultimately collapsed leaving clients out of pocket, often without protection from financial compensation due to the Insurer being a non-Financial Conduct Authority (FCA) regulated company.
- The entry of established UK Insurers into the care sector who have not always had the requisite experience and understanding of the market to price adequately to cover claims resulting in their subsequent withdrawal from the market.
There are however some Insurers with solid financial security, fully registered with the appropriate authorities who place sensible pricing decisions at the heart of their underwriting allowing for sustainable and reliable long term presence in the care sector. It is vital that you choose an Insurer who is directly authorised and regulated by the FCA, a primary member of the Financial Services Compensation Scheme and rated at least BB+ or higher by a known international insurance rating agency.
Why choose a policy specific to care homes rather than standard business insurance?
Generally speaking, standard business insurance will not include protection against the specific risks of the care industry which could leave your service users, staff and business vulnerable. While some insurance brokers may patch together various policies to cover your liability, buildings, contents etc., this will more than likely leave holes in your cover in regards to specific cover for a Care Business. Below we have outlined some of the key features to look out for, some of which are specific to a Care Business and others which you may need to adapt from the standard business policy:
Medical Malpractice Insurance
This is a vital part of an insurance policy for any care provider as it protects against claims resulting from errors made by medical professionals – for example if a staff member was to administer the wrong medication. It is covered under the public liability section of a policy but will usually have its own indemnity limit separate to that of the rest of that section of cover – i.e. the limit under the public liability section could be £10 million, but the limit for medical malpractice claims may be restricted to £2 million. Your policy schedule should outline this clearly for you, but if you are unsure it is worth confirming with your broker that you have adequate cover.
This is to protect both you and your residents. As the owner of the business you are responsible for ensuring that your Care Home is as risk free as possible, but even with the best, most efficient risk management policies in place accidents can still happen. The Public Liability section of your policy covers your legal liability for accidental loss, damage or injury to a third party on your premises. With the current climate around abuse claims and the eagerness of claims farmers to chase both residents and relatives to claim against Care Homes it is imperative that you have extensive cover in this area and know exactly what you are and are not covered for. You can read more about this in one of our earlier articles here https://www.aldium4care.co.uk/what-to-look-for-in-care-home-insurance/
Employers Liability cover guarantees that you have access to adequate funds should a situation arise where you need to compensate a member of staff for any injury or damage resulting from a situation that you, as their employer, are responsible for. This is a legal requirement and most policies cover this up to £10 million as standard.
Flexible Liability Cover
While most policies will include public liability cover at £5million as standard there are times when you may need to temporarily or permanently raise this limit to £10million in order to tender for a public contract. A bespoke Care Home policy should allow you to raise the amount covered when you require it. It may be the case that your Insurer limits their public liability cover to £5 million, but the Local Authority require you to have cover for £10 million. In this case you will require what is known as an Excess Layer policy to cover the additional £5 million required. This means that a separate Insurer from the one providing your policy will cover you for the additional amount, but your Broker should be able to include this in your overall package.
The personal belongings, valuables and money belonging to your residents are covered separately to your business contents so it is imperative that you secure adequate cover for your residents in addition the amount you have declared for you contents. These levels can differ between policies so it is important to check what you’re covered for. Resident’s high value items will likely need to be insured separately and don’t forget that personal cash usually has a separate limit.
A Care Home business is usually completely reliant on the premises and it is more than likely your most expensive asset. The buildings insurance part of your policy exists to cover the costs for repairing damage – from storm damage to your roof right through to rebuilding following a serious fire. This means that you will need to insure yourself for the full re-build cost of your property to ensure cover should the worst happen. It is important to factor in not just the main building itself, but also any outbuildings, boundary walls, pools, fitted kitchens and bathrooms etc.
The contents insurance cover in your Care Home policy is there to protect the items in your building that belong to your business. This includes everything from your office equipment (computers, chairs etc.) to specialist care machinery (hoists, walk in baths, washing machines etc). It is also worth noting that if you lease equipment then it may not be necessary to accept the insurance offered by the leasing company as these items can usually be covered under your Care Business policy. Make sure to ask your broker about this if you are unsure as you could be paying to insure the same item twice.
The business interruption section of your Care Home insurance policy covers you against financial loss following an event which causes the business to run at an increased cost of working, such as a fire. It is important not to underestimate how long it can take to get your business back up and running following such an event – for example, if your Care Home building is a heritage listed property then it may take much longer to rebuild if you need to source a particular material. Most Brokers would suggest a 24 month indemnity period as standard but this can be increased if you feel that it could take longer for your business to recover from a serious incident.
Service equipment, such as lifts and personal hoists are required by law to be inspected either annually or bi-annually. This section of a policy can also include cover for breakdown from internal defects, accidental damage from an extraneous cause and the hire of replacement equipment. This is not usually included as standard as part of a Care Home insurance policy so it is important to remember to ask your broker about this cover if they do not mention it.
There are a wide range of legal pitfalls that a Care Home Owner may encounter on an almost daily basis and we have found that Care Home Owners are more likely to claim on this section of a Care Insurance policy than any other. This section of your policy provides cover for many situations but it is most commonly used for employment disputes, contract disputes and also legal defence against criminal prosecutions brought by the Police, Health & Safety agencies and Local Authorities. It also gives cover for civil actions in some specified circumstances. Comprehensive legal protection should also include a number of 24 hour helplines covering legal advice, tax advice and counselling.
Loss of Registration
It goes without saying that the loss of registration for any Care Home can be devastating. This section of the policy provides cover against the financial depreciation of the premises or reduction in turnover following the withdrawal of the certificate that allows you to run the business.
As we said at the start of this article: a Care Home insurance policy can and will vary from insurer to insurer, so it is important to know exactly what cover you do have and what cover you do not have. Your Insurance broker should fully understand your requirements and have the necessary expertise in and knowledge of the care sector to find cover that meets those requirements for you. This is essential to being able to provide you with the suitable technical guidance in a clear manner and obtaining cover that truly reflects your bespoke insurance needs. That’s why our consultants and underwriters at Aldium have been specially trained to guide and advise you when it comes to selecting the best cover for your business. They have a shared background in both financial planning and direct care, and this combined knowledge helps them to understand your exact requirements and advise you on the best possible solutions to your insurance requirements.