Explaining Professional Liability Coverage Options to Home Health Care Providers

In properly protecting your home health care clients against the various risks they face, Entity Professional Liability is a critical component to any comprehensive insurance program. In addition to understanding what the policy is designed to do – cover claims made against the insured by patients alleging negligence in providing, or failing to provide, professional services – it’s equally important that clients fully understand how the policy works and the options available to them when purchasing the coverage. In going over the details of the policy, you’ll help mitigate any potential coverage issues should a claim occur.

The first policy feature to address is how a claim may be triggered under a Professional Liability policy and the two options available. An occurrence-based policy will cover an incident that occurs during the policy period regardless of how many years later the claim is reported. Incidents that occur before the occurrence-based policy is issued are not covered. Use an example to illustrate how this type of policy works so the home health care provider is clear. For instance, let’s say a provider purchases an occurrence-based Professional Liability policy with an effective date of January 1, 2018 from ABC Insurance. In January 2020, the client decides to get coverage from XYZ Insurance. A claim is then filed against the home health care agency in mid-June of 2020 for an incident that occurred back in September of 2018. Since the incident occurred while the policy was active with ABC Insurance this is the “occurrence” policy that would respond to the claim, not the current policy with XYZ. The benefit of having an occurrence-based policy is that there is no need for the client to purchase an Extended Reporting Period endorsement.  The disadvantage to this type of form is the need to keep track of which occurrence policy in the past will respond to the claim just filed. Also, in some instances, the former insurance company may not longer be solvent.

The other option is a claims-made policy, which will cover an incident made against the insured by the policy in force at the time the claim is made. A retroactive date is typically established as the day the very first claims-made policy is issued. All subsequent renewal policies use the same initial retroactive date. Claims that occur before the original retroactive data are not covered. If the insured decides not to renew the claims-made policy, an Extended Reporting Period endorsement may need to be purchased to cover incidents filed after the policy is terminated. One advantage to a claims-made policy is that a provider can cover risks resulting from its past services under the present policy. As a result, you along with your client can consider both economic and social inflation when setting policy limits and deductibles. One disadvantage of this type of policy is the need to follow precisely the notification procedures for claims and potential claims situations. Because coverage is triggered by the insured’s awareness and notification of a claim or potential claim situation, failure to properly provide notification to the insurer can eliminate coverage.

There are other factors that should be thoroughly explained to clients when going over how a Professional Liability policy works, including if there is a deductible plan or retention levels, any separate limits for specific exposures, and any additional coverages unique to the industry (such as non-owned and hired auto and abuse coverage for home care firms).

At Manchester Specialty Programs, we provide you with the opportunity to offer both occurrence and claims-made Professional Liability insurance for home health care providers. Our claims-made policy can be purchased with an Extended Reporting feature or Prior Acts coverage in the event a claim is filed after the policy is terminated. Our policy also offers a zero deductible plan along with flexible retention levels; Abuse & Molestation coverage with separate limits within the policy form; HIPAA, Cyber and RAC coverage; and coverage for employed physicians in the role of medical director or hands-on care including recertification of patients for Medicare purposes. We’re available to discuss what type policy makes the most sense for your home health care client. Contact us at 855.972.9399 for more information.