Which Commercial Liability Insurance Carrier or Policy is Good for my Facility? (Part 3 of 3)

What is the best coverage for my facility?

The best insurance carrier would be an admitted insurance carrier in the state your facility is located, written on the occurrence form, broad in definitions and coverages, have legal and claim expenses outside the policy limits, and have at least an A on A.M. Best Rating. A California admitted insurance carrier will give an assurance that the California Insurance Guarantee Association (CIGA) protects policyholders or insureds if the insurer becomes insolvent or bankrupt. An occurrence form will provide protection beyond the policy expiration date, unlike the claims-made policy which ends on the policy expiration date. When a policy is broad in definitions and coverage, then you will have more liability coverage and protection. In most cases, an admitted insurance carrier will define Professional Liability broader and usually have both Physical and Sexual Abuse Coverage with higher policy limits. Lastly, when a claim is filed and you have the legal and claim expenses are outside the policy limits, this would preserve the policy limit for a lawsuit settlement. If your policy limit on General Liability, Professional, and Abuse Coverage of $1 million per occurrence, then legal and claims expenses would not reduce the $1 million liability claim. Admitted insurance carriers, in general, will be higher in insurance premium than non-admitted insurance carrier or risk retention group policies. By having the best coverage and protection, your liability claim should be well defended and settlement should be easier.

What insurance carrier would meet the licensing requirement of $1 million per occurrence, $3 million aggregate?

If your facility is being licensed through the State of California’s Community Care Licensing Division and you are required to get a $1 million per occurrence, $3 million aggregate limit on liability insurance, you must meet the requirement of licensing. Since all three types of insurance carriers: Admitted Insurance Carrier, Non-Admitted Insurance Carrier, and Risk Retention Group provide these limits, all three would satisfy the requirements of Community Care Licensing Insurance. Although all three insurance carriers provide the same policy limits of $1 million per occurrence, $3 million aggregate limit, liability definitions and coverages are not the same. This means when a claim is filed, some incidents will be covered and some will not depend on the insurance carrier. Also, some policies may have claims- made form, means coverage will end by the policy expiration date unless you have extended or tail coverage. Some policies may have legal and claims expenses within the policy limits of $1 million per occurrence, thus any legal and claims expenses incur would reduce the $1 million per occurrence if a settlement is reached.

What is the least expensive policy for my facility?

In general, a non-admitted or risk retention group, claims-made form, limited definitions and coverage, and inside policy limits of legal and claims expenses tend to be the least expensive. Assuming that a claim never occurs, going with the least expensive liability policy would make sense. However, when a liability claim does occur, having the least expensive liability policy may be inadequate to protect your business, caregivers, resident or your livelihood. If your liability insurance policy is inadequate, you may end up personally responsible for claims that are not covered by the insurance carrier.

Which liability policy it good for me?

Insurance policies are designed for a variety of business needs, protection, and premium to meet demands of the insureds. The best way to know what policy is good for you is first to determine what are your business insurance needs and goals. By answering these questions, you should have a better picture on what are you looking for. If you have been in business for a number of years, have a lot of business assets and afraid of lawsuits, get the best coverages and policy is probably a better way to go. However, if you are small facility and have 1 or 2 residents, getting a reasonable policy with coverage and premium would be better. After selecting the appropriate coverage and policy type, you should look at insurance carriers’ technology, customer service support and educational materials. When you have a question, you definitely want an insurance carrier that can provide the answers to you as soon as possible. Finally, you want to look at the premium. Obviously, like anything else, you want to stay in budget to operate your business.

Disclosure: The material is written by Protégé Insurance Inc. All materials are reserved.