A liability insurance policy goes a long way toward protecting your Residential Care Facility for the Elderly (RCFE). If one of your residents gets hurt at your facility, for example, this policy can step in to cover the resulting expenses if you’re found liable.
At least, that’s the case if the incident is covered under your policy. To make sure it is, you need to understand how your liability insurance works. It could be either claims-made or occurrence coverage, and understanding the two could mean the difference between actually being protected or finding you’re on the hook for the cost of the incident.
How Claims-Made Policies Work
This is probably how you would imagine your policy would work. With claims-made coverage, an incident is covered if the policy was in effect on the date you make the claim to your insurance provider.
Say, for example, that your liability policy has an effective date of January 1, 2023 to December 31, 2023. One of your residents trips and falls on October 8, 2023. Their family sues you for the injury and you become aware of the legal proceedings on October 19, 2023. You report the claim to your insurer the next day. Because the claim was made within the effective coverage period, your policy jumps into action to cover court costs — and even the settlement if one is levied against you (up to your policy limits).
But let’s say the family doesn’t bring legal proceedings forward until January 10, 2024, when they learn that their family member’s hip needs surgery to heal properly. If you didn’t renew your coverage for the 2024 calendar year, you would be out of luck. That’s where occurrence policies come in.
How Occurrence Policies Work
Occurrence policies protect you if the incident took place during the coverage period, even if you don’t bring the claim to your insurer until well after that policy expires.
Using the example above, if the incident occurred on October 8, 2023, during which time your policy was active, and you don’t make the claim until January or even later in 2024, you’re still covered.
In short, occurrence policies offer coverage based on the date of the incident, not the date the claim was made. As a result, they can generally provide broader-spectrum protection to RCFEs.
Choosing the Right Coverage Type for Your RCFE
Ideally, you’ll continually keep a liability insurance policy in place for as long as your facility operates. But let’s say you want to switch from one insurance provider to another because the new insurer offers better protection at a lower cost.
If you have a claims-made policy that you cancel and an incident gets brought forward after the policy is canceled, you’ll have to cover the costs yourself. With occurrence coverage, you would still have protection.
So why don’t all RCFEs choose occurrence policies? One key reason: they’re more expensive.
Ultimately, finding the right protection for your facility requires you to find the balance between cost and coverage. Fortunately, you don’t have to do that alone. To talk with an RCFE liability insurance expert for guidance toward the right policy for your specific needs and your facility’s budget, call our team at (805) 413-5668.
