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Check for Liability Sub-Limits on Your Senior Living Facility Coverage

By Tangram Insurance Services
April 25, 2023
Check for Liability Sub-Limits on Your Senior Living Facility Coverage

In the event of a lawsuit, your adult living facility will rely on its liability insurance coverage. However, many insurance providers are adding sub-limits on senior living facility coverage for common loss events. These lower limits mean you may lack the coverage you need in the event of litigation.

What Are Sub-Limits?

In insurance, a limit is the maximum amount your policy will pay. Sub-limits apply to specific loss types and are less than the policy’s primary limit. They occur in both property and liability policies.

For example, your commercial property insurance policy might have a $2 million aggregate limit but a $500,000 flood sub-limit. If you experience a loss from flooding, this policy wouldn’t pay more than $500,000 – even though your repair costs could be much greater.

In liability insurance, a policy sub-limit is sometimes assigned for punitive damages. However, some insurers in the adult living sector have also been adding sub-limits for claims alleging bedsores and elopements. Because sub-limits can drastically reduce how much your policy will pay, they deserve your attention.

Claims Costs Are Rising

When you’re insuring a building, you want your limit to be high enough to cover the replacement cost. When you’re insuring your business against lawsuits, determining how much coverage you need is less straightforward, and current trends are making this even more challenging.

  • Social inflation is pushing claims costs upward. Social inflation refers to the increase in claims costs due to social factors and jury opinions rather than economic factors and regular inflation. This is important because juries keep handing out larger awards.
  • Third-party litigation funding is leading to longer, costlier cases. Swiss Re says third-party litigation funding is a fast-growing industry and it’s driving up litigation costs.
  • Nuclear verdicts mean an individual award can be massive. Jury awards of at least $10 million often earn the moniker “nuclear verdict.” According to the S. Chamber of Commerce, nuclear verdicts are on the rise. As a result, just one lawsuit can be devastating to an organization.

Given these trends, many businesses realize they need as much liability coverage as possible.

Check Your Coverage

When an assisted living facility is sued over allegations of neglect related to bedsores or elopement, the awards and settlements can be massive. In a recent case, a Florida jury awarded $12.5 million in damages in a lawsuit involving bedsores against an assisted living facility, according to Tampa Bay Times.

Facility risk managers may think they have enough coverage to handle such a lawsuit. However, if the insurer has introduced lower sub-limits, these facilities may end up shouldering a much larger portion of the costs than they expected.

Securing Robust Coverage for Your Senior Living Facility

Senior living facilities are navigating a tough business environment. Resident acuity is increasing as the population ages and staffing problems mean facilities don’t always have as many experienced employees as they need. As facilities take steps to provide a safe environment for residents, they also need to reassess their insurance.

Don’t wait until you’re hit with a lawsuit to find out whether you have enough coverage. Tangram provides insurance for adult residential care facilities through the Personal Care & Assisted Living Insurance Center (PCALIC).

Unlike many insurers, we offer policies without separate sub-limits on senior living facility coverage for bedsores and elopements. Learn more.


Article provided by Tangram Insurance Services