As the owner or manager of a Residential Care Facility for the Elderly (RCFE), you’ve seen how residents’ needs and preferences evolve over time. That might inspire you to make updates to your property. You want to create the best, most supporting living environment that you can for your residents, after all. Plus, as an added benefit, improving your offerings can help you increase your revenue.
If you decide to take on renovations, though, there’s a critical step you can’t miss: talking with your insurance agent. If you don’t, your updates won’t be covered. Worse yet, you could be taking steps that would invalidate your policy as a whole.
Let’s take a closer look.
The Link Between Your Property and Your Policies
When your insurance company underwrote your policies, they looked at the details of your RCFE. Your commercial property coverage absolutely factors in your overall square footage and how it gets used. It also evaluates your risks (e.g., commercial ovens) and any mitigating factors (e.g., sprinkler systems).
Even if you don’t expand your facility’s footprint, changing the usage of a space can change your risk level. If you turn an area that was previously a resident lounge into a medical treatment area, for example, that space suddenly represents a much higher level of liability. That change can be significant enough that it would invalidate your liability coverage.
In short, the details of your property link directly to the details of your insurance policies. If you make a change in the former and don’t update the latter, it can break that link.
Then, if a claim does arise, your insurer has grounds to deny that claim. Specifically, they can argue that you had a failure to disclose material changes, which insurers see as misrepresentation. That’s usually enough for them to cancel your policy.
That leaves you on the hook for the cost of any situations that could have been covered. That’s an unwelcome and expensive scenario. Fortunately, you can take steps to avoid it.
How to Handle Renovations and Policy Updates
First things first, get in touch with your insurance agent before you start construction. This makes it easier to update your policies in tandem with your renovations, but it also offers another level of protection. Doing construction at your facility — especially if you’ll continue hosting residents during it — introduces new risk. Your insurance agent can help you put policy endorsements like a builder’s risk policy in place to protect you and your investment in improving your facility.
Make sure you share all the details you have about your planned improvements with your insurance agent. They can communicate with your insurer to make sure your policies reflect the changes, helping you avoid gaps in coverage and claims denial.
As your renovation moves forward, you can further protect yourself by carefully documenting it all. Save communications from your contractors so you have a clear record of what happened when. Also, make sure you’re named as an additional insured on the contractors’ policies so you have that added protection while work happens.
Your insurance agent can help with all of this, from getting endorsements to protect you while you’re under construction to adjusting your policies to sufficiently cover the end result. To speak with an experienced RCFE agent, contact our team at InsureMyRCFE at (805) 413-5668.
