professional liability

Why do Nursing Homes Need Professional Liability Insurance?

Like most care service facilities, nursing homes routinely have to deal with business risks and liabilities. Because of the possibility of incurring severe financial and reputational damage, it is essential for nursing care facilities to obtain nursing home insurance.

Insurance coverage is especially effective when employed as part of a comprehensive risk mitigation program. By proactively working to address these risks, nursing homes can reduce the damage that potential liabilities can cause to the business.

Studies reveal high rates of claims against nursing care facilities

Research on risks and liabilities showcases the importance of being protected with the appropriate insurance plan. An analysis conducted by Aon Global Risk Consulting (AON) in 2018 revealed the following details on general and professional liability for long-term care facilities and their resulting claim costs:

  • The rate of loss per occupied bed increases by as much as 6% every year
  • The amount of loss predicted for 2019 was $2,410 per occupied bed
  • The frequency of total claims increases by as much as 3% every year
  • Claims of 1.11 per 100 beds were estimated for 2019
  • The average size of claims increases by as much as 3% every year
  • The severity of each general liability and professional liability (GL/PL) claim was estimated at $216,000 for 2019

The results of this study show a significant increase in the number of claims in nursing care facilities. Other studies conducted since then reveal that, on average, memory care and assisted living facilities incur higher losses from claims than other nursing establishments.

Mitigating risks and liabilities in nursing homes

Attorneys representing the nursing care industry and professional liability risk coverage insurers know the importance of effective risk management. Extensive experience with risk-management programs gives these professionals in-depth knowledge of the need to have a comprehensive range of insurance to safeguard against common industry risks.

Some of the insurance policies that would be beneficial to nursing care facilities are:

  • Medical professional liability
  • Medical malpractice
  • Primary and excess limits
  • Medical billing coverage

Coverage for these risks is essential for almost anyone working in the medical profession. It might also be helpful to have coverage for the following:

  • Commercial general liability and property
  • Hired and non-owned auto
  • Sexual misconduct/abuse

Of oucrse, as business owners and operators, nursing home administrators should have the following insurance:

  • Management liability (D&O, EPL, Fiduciary)
  • Employee benefits
  • Employment practices
  • Worker’s compensation

These insurance coverages protect the owners of nursing homes from liabilities and claims arising from complaints about unfair labor practices, management responsibilities, and other related concerns.

Nursing care facilities may also find the following coverages beneficial:

  • Cyber/privacy liability
  • Civil fines and penalties

The benefits of professional liability risk coverage

Professional liability insurance provides nursing homes coverage against claims of damage resulting from medical incidents at the facility. These claims typically arise from the care and treatment of residents by facility staff members and may involve alleged negligence, medical malpractice, and abuse or neglect.

Professional liability insurance is sometimes referred to as Errors & Omissions (E&O) insurance. It provides similar coverage as medical malpractice for physicians but is geared toward the needs of nursing homes and assisted living facilities.

Professional liability insurance essentially protects nursing home administrators and staff from professional liability when a lawsuit is filed by residents about the quality of service provided in the nursing home.

Some of the claims that professional liability insurance may cover include:

  • Medical errors
  • Negligence
  • Non-delivery of promised care and services

Among the claims that nursing homes could face are accusations of misdiagnosis or improper medicine prescription. These claims may be filed regardless of whether or not the incident caused the death of the resident.

In most cases, professional liability insurance will pay the costs associated with a legal defense. If the nursing care facility is deemed liable, insurance will also pay for damages up to the policy’s limits.

Nowadays, there is always a chance of being sued for wrongdoing or liability no matter what branch of the medical profession you belong to. Nursing homes aren’t immune to these risks, so there is always a possibility of facing claims from facility residents regardless of their professionalism and good intentions. Because of the potential for costly fines, settlements, and even litigation, nursing homes need to be protected with a comprehensive professional liability risk coverage plan.

About Midwest Insurance Group

Midwest Insurance Group is a risk retention group developed by Caitlin Morgan Insurance Services in response to the unique needs of the healthcare industry, particularly that of senior living facilities. With rising premium costs and difficulties in obtaining coverage from the traditional professional and general liability insurance market, Midwest Insurance Group represents a viable, long-term insurance alternative for the senior living sector, giving members complete control over costs and claims management. Midwest Insurance Group is reinsured with Lloyd’s of London, and A rated by Demotech.

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