Comprehensive guide to care home insurance: protecting your business
By Alan Boswell Group
The UK care sector is a highly regulated industry, and care home insurance is essential to running a successful business. Figures from the Office for National Statistics estimate that there were over 360,000 care home residents in England between March 2021 and February 2022. So, if you’re the owner or manager of a care home and want to make sure you’ve got all your insurance eventualities covered, read on for the full lowdown.
What are the key responsibilities in a care home?
Care homes vary in nature and will therefore have different responsibilities based on the type of care they provide for their residents. However, some key responsibilities are common across the board:
Creating and implementing care plans: staff will work with residents and their families to develop individual care plans that meet their specific needs.
Personal care: including assisting with daily activities such as bathing, dressing, grooming, and eating.
Monitoring health: staff are responsible for recognising signs of illness or changes in a resident's health and taking appropriate action to address it.
Administering medication: staff make sure residents receive their medications as prescribed and that they are stored safely.
Managing appointments: staff can be responsible for scheduling and arranging appointments with healthcare professionals for residents.
Maintaining a clean and safe environment: ensuring the home environment is clean and safe for residents to help prevent accidents and the spread of infection.
Ensuring staff are trained and supported: ongoing training and support ensures staff have the knowledge and skills to provide the best quality care.
Providing food and nutrition: staff are responsible for ensuring residents receive nutritious meals and their dietary requirements are met.
Providing social and recreational activities: staff provide opportunities for residents to engage in social and recreational activities to enhance their wellbeing.
Communicating with residents and their families: regularly communicating with residents and their families is an important part of running a care home, providing updates on resident’s care and addressing any concerns.
What is care home insurance?
Private businesses that look after elderly or vulnerable people, who may require round-the-clock care and support, need to ensure they are fully protected by insurance if something goes wrong. Care home insurance is designed to protect care homes from a range of liabilities. It is typically purchased by care home owners to cover the full range of business operations and services they provide, offering financial protection and peace of mind.
Why do I need care home insurance?
In any care home, the risk of accident and injury is high, and while best practice should obviously be followed to minimise risks, comprehensive cover is essential.
Care homes differ; some provide accommodation and basic care, while others deal care for residents with more complex needs, such as dementia and Alzheimer’s, and young adults with complex disabilities. Such businesses will require different types and levels of cover. That’s why it’s best to buy insurance through an experienced and knowledgeable insurance broker who can help you to tailor an insurance package that meets your business needs.
Rules and regulations concerning care homes change frequently, so it’s important to keep up to date with your legal obligations. Insurance is important for care homes for several reasons:
Financial protection: care homes face a variety of risks and liabilities, including accidents, injuries, property damage, and legal claims. Insurance provides financial protection and can help to cover the costs associated with claims of damage or injury from residents, staff, and visitors.
Legal requirements: some types of insurance, such as employers' liability insurance, are required by law, so care homes that don’t have the necessary insurance may face penalties and legal action.
Compliance with regulatory requirements: many regulatory bodies, notably the Care Quality Commission and local authorities, require care homes to have public and employers liability cover, so it’s important to be aware of these and keep up to date with any changes. Having the necessary insurance can help ensure compliance with these requirements and avoid penalties.
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What types of insurance are needed for a care home?
Care home insurance encompasses a range of different covers, depending on your business’ activities and the risks it’s exposed to. Cover to consider includes:
Employers’ liability insurance - covering you against claims by your employees
Employers’ liability insurance is required by law. It protects the business against any legal action by your employees regarding work-related accidents or injuries. Should an employee launch a compensation claim, for example, due to a back injury sustained when assisting a patient, your insurance policy will cover the cost of legal expenses incurred through defending claims and any compensation awarded.
Buildings and contents insurance - looking after your assets
If you own the premises you operate from, it’s important to have commercial property insurance covering the asset for its rebuild cost, as well as the home’s fixtures and fittings, furniture, office equipment, medicines and specialist stock and equipment. While you will not be insured against everyday wear and tear, you will be covered if items are broken or stolen by staff, residents or visitors.
Mechanical equipment like lifts, hoists, etc., generally need to be regularly, independently inspected, and your insurer will need you to comply with these terms.
Residents’ contents are a separate matter. Depending on your agreement with service users, they may need to insure their personal possessions and belongings when entering the home. Alternatively, you may take out insurance to cover residents’ belongings as a business. Make sure that everyone knows whose responsibility this is upfront.
Medical malpractice insurance- covering all eventualities
Nursing and medical care is largely a matter of judgement; even the most experienced and knowledgeable professionals can get it wrong. When a patient’s health is at stake, an understandable mistake can easily lead to legal action.
This policy protects medical professionals against legal action resulting from misdiagnosis and is strongly recommended for any business recommending specific courses of treatment. A separate policy can also be taken out against the consequences of an outbreak of an infectious disease on the premises.
Professional indemnity insurance - because mistakes can happen
Professional indemnity (PI) insurance may cover similar areas to medical malpractice but has a wider reach, including mistakes made by employees that result in legal action. On a medical level, this might include a nurse accidentally administering the wrong medication, but it could also cover a member of staff who needed to lift or restrain a service user, accidentally causing injury.
Legal expenses insurance - make sure you’re not out of pocket
There are a wide variety of legal expenses that a care business may have to face in addition to those outlined above. These might include disputes with employees or other contractors, and legal cases brought by the local authority or HMRC. Allegations of abuse or widespread maltreatment are also a possibility that every care business must consider. Even if they are completely unfounded, the legal costs can be extremely damaging without adequate commercial legal expenses insurance.
Public and other liability covers - because visitors have accidents too
Public liability insurance covers you against action taken by a third party visiting your premises. This could be a relative of a resident, a contracted worker or a local council inspector. If they suffer an accident while on your property, such as, slipping on a wet floor, public liability insurance will cover your business against the consequences.
Directors' and officers' insurance - protect yourself as well as your company
Another liability policy that you should seriously consider is D&O insurance. This protects a directors' liability against legal action taken against the company, so they will not be required to pay out company damages from their own pocket. It also protects individuals when the company taking action against them.
Cyber insurance - security in an ever-changing world
A care home is often responsible for storing service users’ sensitive personal and medical records, as well as the usual business data concerning HR and payroll. Taking out cyber insurance protects your business against the consequences of a data breach, whether due to a malicious attack or carelessness.
If your computer system is out of action due to hacking, you will need to get it up and running as soon as possible. A care home needs to maintain continuous, uninterrupted service, and, in the modern world, this is often dependent on a reliable computer network, so it’s worth conducting a regular cyber security audit.
Business interruption insurance - don't lose out on income
This covers loss of income and expenses incurred due to unexpected events that disrupt your care home's operations, such as a fire or flood. Business interruption insurance can help pay your bills, retain staff, fund temporary premises to operate from and maintain supplier relationships. Unfortunately, events such as a Covid-19 breakout would not be covered by business interruption insurance.
Key person cover - for those essential team members
Provides financial cover should something happen to key personnel within your business, such as the business owner or members of the leadership team who are deemed essential to the financial success of your business. If they are absent due to a long-term illness, disability, or unexpectedly passing away, this form of life insurance could be vital to ensure the survival of your business.
Tips on getting the best cover for your care home business
There are many kinds of businesses operating in the care home sector. These can include homes for the elderly, children’s homes, residential and/or day centres for people with learning difficulties, hospices, supported living facilities, and so on. This means there’s no ‘one size fits all’ insurance policy for every type of care business.
Getting the best insurance cover requires careful consideration of the specific needs of the business, so here are our top tips on getting the right policy:
Identify your risks: a risk assessment will identify areas where you may have exposure that could lead to a claim. Knowing what these risks are will help you find an insurance policy tailored to your business that provides appropriate cover.
Research insurance providers: research brokers and insurers that specialise in providing cover for care homes and have a strong reputation in the industry.
Compare policies: once you’ve identified potential insurance brokers and providers, compare your options to find the best solution for your business.
Review the policy exclusions: make sure to review the policy exclusions carefully and ask questions if anything is unclear.
Consider additional covers: depending on the specific needs of your home, you may want to consider some of the additional cover options we’ve looked at in this article.
Work with an experienced insurance broker: a reputable independent insurance broker, such as Alan Boswell Group, can help you navigate the insurance market and find the best cover for your needs. They will also do the hard work for you by identifying the cover you need and searching the market for a suitable policy.
Conclusion
There are several factors to consider when arranging supported living insurance or care home insurance, and an independent insurance broker with sector-based experience will be able to make sure you have the right combination of policies to meet your needs, ensuring you maintain your duty of care and commitment to all your service users, without the worry of financial distress if a problem arises.