Insurance can be a nuisance. It’s something that you are required to have in place, it means having to speak to several Brokers to ensure you’re getting the best price, and getting numerous quotes can take up a significant portion of what little spare time you have as a Care Home owner.
Looking for best value care home insurance
It seems that we have all been conditioned over the years to expect a battle when looking for the best value, and it can appear that the insurance advisor on the other end of the phone is more interested in how much money they can get off you than they are in ensuring that you are getting the most appropriate cover for your business. You can assume that all insurance brokers know this. They know that, within the Care Home Insurance market, they have a client base who doesn’t always have the time to shop around, and one that is already under massive financial constraints and so will often take out a policy based solely on price.
High risk in care home insurance
The Care Insurance market is a very risky market for insurers to get involved in – any industry where the care of a vulnerable person is entrusted to somebody being paid a wage to do so means massive exposure to potential liability claims. Abuse is a very serious risk that the majority of care businesses professionally assess and minimise any potential risk. For many years, established care procedures, rigorous training, accurate record keeping and live audits have ensured that incidents against service users are minimised. However media coverage around the care industry has increased massively over the last few years especially with regards to abuse suffered by service users at the hands of care staff. The consequences of this are likely to be an increased awareness leading to an increased number of requests for reassurance by relatives, increased vigilance by regulators and certainly increased respect for every incidence of whistle-blowing or allegation of abuse. Local authorities may well insist on additional evidence of risk assessments to ensure their placements/referrals are suitably protected.
People who may make abuse allegations
Raising awareness in the media is likely to give comfort to service users and their families who feel that they or a relative have been abused to come forward and notify their grievances. Allegations of abuse can come from:
- Service users.
- Families of service users.
- Current staff at the care home.
- Care workers who have left establishments may submit allegations for the period they were working for care providers.
So as well as current staff, service users and their families potentially making allegations, any person previously involved with the organisation may now bring forward allegations.
The Claims Connection website here illustrates how there are claims “farmers” out there who are seeking to make “no win no fee” claims for abuse against care homes, and this is just one of many of the firms offering this type of service. It gives a complete action plan on how to bring forward a claim, even if the service user is deceased. These legal firms are not advertising in the hope that they will clean up the care industry, rather it appears as if they want to thrive on any mistake that could happen.
This means that the number of reported abuse cases is likely to increase, and Insurers will be looking to restrict the total liability exposure on themselves. One of the more recent changes that Insurers have made to help reduce their exposure to liability claims on a Care Home Insurance policy is to issue cover on what is known as a “claims made” basis.
“Claims made” care home insurance policies
As the name indicates, claims made policies provide cover for claims made in the period the policy is in force. Claims made policies provide cover only so long as the insured continues to pay premiums for the initial policy and any subsequent renewals. Once premiums stop, the cover stops and any claims not known or made to the insurance company during the coverage period will not be considered.
To give an example of a “claims made” care home insurance policy – a Care Home has been insured on claims made policy in 2014 to 2015, and in 2016 their broker has placed their insurance with a different insurer. Someone reports an abuse claim for an incident that occurred in 2014. As the care home had a claims made policy in 2014 and they are no longer with the same insurer, then the insurer who was providing cover in 2014 will not be liable to cover the costs of that claim.
Risk of “claims made” insurance policies
What this means to the Insured is that there is a risk of an unknown or unreported claim being made long after the policy period and not being covered because the claim was made outside of the cover period. What would you do if you were faced with a liability claim for over a million pounds that you had to settle without the assistance of your insurance company? Would it mean the end of your business? Not only does it leave you vulnerable to this type of scenario, but it can also leave you paying much higher premiums for years to come. If you have been on a claims made policy, then to ensure continuous cover you will need to remain with that insurer. What this means is that you could be forced into paying well over the market set rates for years to come if you don’t want to leave yourself exposed to a significant gap in your cover. Also, with the amount of large insurers that have pulled out of the care market in the last couple of years there are no guarantees that your broker will be able to keep you with the same insurer year on year.
Retrospective claims and “claims made” insurance policies
You have to wonder what happens if you decide to sell the business and retire? Obviously you will no longer have an active insurance policy, but that won’t stop people possibly making retrospective claims against the company for incidents that may have happened when you were responsible for it. A claims made policy means you are on your own at that point in regards to retrospective claims.
Obviously though, this type of cover is usually significantly cheaper than the more suitable, comprehensive cover also available.
So what can you do to avoid falling into this trap? Firstly, as always, make sure you read the small print. It’s not enough to simply trust the broker you have used for years to ensure you are getting the best cover. This information can be buried deep into the small print so vigilance is essential. We recommend that you make sure that liability claims on your policy are covered under a “claims occurred” policy.
Long term benefits of “Occurrence Coverage”
Claims occurred cover (or “Occurrence Coverage” as it is sometimes called) is, in our opinion, the much better, comprehensive option. Occurrence cover is insurance that provides cover for the act when it occurs regardless of when it is reported.
If you had cover under an occurrence policy in 2000 and the claim is reported today (as is often the case with abuse claims) then the claim is covered even if you are no longer with that insurer. You don’t have to renew with the same insurer year after year, leaving you free to get as many quotations as you feel suitable. It also won’t leave you with any retrospective gaps in your cover to worry about, even long after you retire.
Check your Care Home Insurance programme fulfils your requirements
So maybe it’s time to change the way you think about Care Home Insurance. More often than not cheaper is not always better, and what looks like a great deal can be something that not only has you paying far more for your Care Home Insurance moving forward, but also leaves you vulnerable to an uninsured claim hitting you personally long after you have retired. Perhaps we should show a bit more interest in what we consider to be an annoyance that we have to endure every twelve months. Become active in your Care Home Insurance programme – ask as many questions about your policy as you can, but make sure that “how much is it?” is the last question you ask and not the first.
“There is hardly anything in the world that some man cannot make a little worse and sell a little cheaper, and the people who consider price only are this man’s lawful prey” – John Ruskin
ALDIUM only issue Care Home insurance policies which cover liability claims on a claims occurred basis as we feel this is the most appropriate type of cover for the sector. If you are unsure of the type of cover your current broker has provided you with, or if you have any questions about your current insurance programme, call the Care Team at ALDIUM on 0151 353 3868 for a free, no obligation review of your current schedule.