Reader Question: What type of insurance would I need for a home health business, in which we assist people at their homes with their medical and personal needs? Employees drive their own cars at this point in time. We do not have company cars. Do I need liability insurance or some other form of insurance? What is the range of prices for the coverage I need?
The demand for home health care businesses is growing, especially as baby boomers become part of the elderly population. A lot of people, regardless of age, prefer having in-home care if they’re required to receive ongoing care versus going to a nursing home. Unfortunately, taking care of people in their homes also presents risks greater than those in a medical facility.
Any business should have liability insurance, but anything to do with health care makes it especially important to carry insurance as they are among the riskiest businesses and are often fraught with claims. This has a lot to do with the fact that home health care providers don’t always have all the things they need in the field and are usually on their own, meaning any responsibilities fall squarely on your shoulders and the shoulders of your employees. Failure to do so can not only result in losing your business, but also in losing personal assets. It’s an unfortunate reality, and we live in a litigious society.
Mike Loughran, the executive vice president of Healthcare Providers Service Organization (HSPO) says health and medical care businesses are some of the most common types of businesses to experience claims. Whether to buy professional liability isn’t a question though.
“The real question is if there’s a risk of being sued. The answer is yes,” explained Loughran.
For such a business, there are different types of insurance you’ll probably want to explore, but one of the most important is professional liability insurance. This is just one of the commercial insurance products you’ll likely need depending on the scope and size of your business, but this is definitely the starting point. As your business grows, you can build upon your protection.
Professional Liability Insurance
Any business needs to carry professional liability insurance, sometimes referred to as Errors and Omissions insurance. This insurance is going to protect you against lawsuits like malpractice or clinician misconduct or negligence. Even the best healthcare providers can come into contact with a dissatisfied client or even company you deal with that could file a claim against you if they believe you’ve caused some kind of damage or harm. Unfortunately, even if you’re not at fault, you would be responsible for paying all legal defense costs or settlement costs. Having general liability will help you pay these costs up to the designated policy limits, which can quickly eat up any assets you have, both personally and professionally.
One of the first things to consider is that you’ve hired employees versus contractors. This means that whatever your employees do, you’re likely to be held responsible for their actions versus if you had contractors who basically work as “self-employed” and who should carry their own liability insurance. The mere fact that you have hired employees makes it even more important to hire staffers over contractors since they’re extensions of your business. Ultimately, you are responsible for their actions as the employer.
Common Risks and Claims
Having a business involving patients brings a whole new set of risks. Even when providers are doing everything by the book, something such as a patient becoming injured while under your care or experiencing an allergic reaction can turn into a claims nightmare. Strokes, falling down, passing out, or doing something else while under your watch can quickly turn into something you’re blamed for, even if you’re not directly responsible. Unfortunately, accusations (both real and false) of patient abuse from you or employees can often turn into a “he said, she said” situation that may end unfairly. With employees, you also face claims of misconduct by employees. We’re all human, and even the most skilled health providers can make honest mistakes, but that unfortunately doesn’t dissolve liability.
One reason for increased risks is due to hiring employees. You can’t always be there to supervise your employees in the field and to keep track of quality performance and responsibilities. Unfortunately, if something like an employee showing up to a client’s home under the influence of drugs would likely be discovered by the client before you.
One of the most common claims brought against home health care providers is because of negligence stemming from standard professional duties. Whether it’s you, an employee, or contractor, a patient can file a claim against you if there’s some kind of failure in job performance that’s either established by ‘standard’ conduct in your particular field or established guidelines and duties that you may have outlined in services you’ve agreed to provide to clients.
“If a patient perceives she has been injured resulting from a health care professional providing, or failing to provide, professional services, that patient could sue. This doesn’t automatically mean that the health care professional has been negligent. It means that the patient perceives negligence,” explained Loughran.
Here are some examples of such scenarios:
- If an employee fails to show up for a shift without contacting you, and the client subsequently fails to take an important medication, misses a critical appointment due to the employee’s absence, or some other kind of injury or damage occurs due to the employee failing to carry out the responsibilities they’ve been entrusted with. Again, this has everything to do with negligence.
- If an employee made a critical error such as accidentally giving the client the wrong medication or combined the wrong medications. In a home healthcare business, your clients are counting on you to provide careful attention and to be extremely diligent in care. Something like providing the wrong medication or wrong dosage amount may be a completely innocent mistake, but if something were to happen to the client, it can still be considered negligent and you could still be held responsible.
You may even want to suggest that even your employees carry general liability insurance because in the event of a large claim, even your professional liability coverage may not be enough.
“All health care professionals should consider purchasing their own professional liability insurance policies,” said Loughran.
What Isn’t Covered
Like any policy, there are exclusions, including:
- Acts outside of the scope of the business
- Intentional acts
- Criminal charges/actions like sexual assault
How Much Coverage Is Needed and the Costs
Martin Khoury, a malpractice attorney in Miami, explained good rules of thumb and said “coverage should as high as one can afford.” He says about $1 million is a good amount. Luckily, this isn’t as costly as it sounds.
Loughran said the average cost depends on rates, assessed risks, and state. However, he says the average cost for such a policy is usually around $120 a year for sometimes $1 million in coverage.
Needless to say, your business is now an asset of yours, similarly to the way a home or car is an investment or asset you want to protect, so is your business. Regardless of its size, you’re still placing your time, money, and dedication into your business, and you should take every precaution necessary to protect it. Over time, you’ll likely find that your insurance needs may change as your business grows and evolves, but to get off on the right start, there are definitely some insurance products you should consider so you can make sure you definitely reach the point of growth. You don’t want to have something great taken away from you before you even get started.