General & Professional Liability: Which Do You Need?

Liability insurance protects your adult residential care facility against potentially expensive lawsuits. To make sure you’re well protected, you usually need multiple types of coverage, including both general and professional liability insurance.

What Is General Liability Insurance?

The Insurance Information Institute says commercial general liability insurance provides protection against financial loss if your business is held liable for property damage, personal injury, or advertising injury caused by your services, business operations, or employees. Imagine these scenarios:

• An employee spills water on a resident’s laptop, rendering it unusable
• A resident slips and falls on some spilled ice, breaking a hip
• You are sued for posting a resident’s picture on Facebook without permission

What Is Professional Liability Insurance?

Professional liability insurance is sometimes called errors and omissions insurance, but it is NOT another name for commercial general liability insurance.

According to the Insurance Information Institute, professional liability insurance covers legal defense costs and judgements associated with claims of professional negligence, misrepresentation, violation of good faith and fair dealing, and inaccurate advice. Medical malpractice insurance is a type of professional liability insurance. Imagine these scenarios:

• An employee makes an error while administering medication
• A resident develops bedsores and family members claim that it happened due to neglect
• A resident with a known allergy is served a meal containing the allergen

Why Do You Need Both?

General liability insurance and professional liability insurance may sound similar, but they cover different types of claims.

The Insurance Information Institute is careful to point out that commercial general liability insurance covers non-professional negligent acts. Professional liability insurance, on the other hand, covers professional negligent acts.

For example, if someone trips and falls on your premises or if your company is hit with a class-action lawsuit alleging misleading advertising, your general liability insurance could provide coverage for the legal costs, up to your policy limits. On the other hand, if you are sued for failing to provide the services stated in your contract, you will typically need professional liability insurance to cover this breach of contract claim.

As an adult residential care facility, you need both general and professional liability insurance. Otherwise, you may have no coverage for certain types of lawsuits.

What Other Types of Liability Insurance Do You Need?

General and professional liability insurance are two key types of liability insurance, but they are not the only types. In fact, your business may need additional liability coverage.

For example, general liability insurance typically excludes claims of injury and property damage associated with vehicle collisions. If your facility owns vehicles, you need commercial auto insurance, including auto liability insurance. If your employees use their personal cars to run errands for the company, transport clients, or carry out other official business, you may need hired and non-owned auto insurance.

Employment practices liability insurance is another important policy to consider. It provides coverage against many employment-related claims, such as lawsuits alleging sexual harassment or discrimination.

Securing the Right Coverage for Your Adult Residential Care Facility

Having the right policies is a critical part of risk management for any adult residential care facility. However, simply buying everything on the recommended list of policy types may be insufficient. Policy terms can vary. Plus, some policies implement sublimits, exclusions, and other restrictions that may mean you don’t have the coverage you need when you file a claim.

For example, some policies are introducing low sublimits for claims related to bedsores and elopements. Since these are common claim types for assisted living facilities, such sublimits can be disastrous.

When purchasing coverage, check the policy terms for any sublimits that will reduce the amount of coverage you’ll have for certain types of claims. Pay attention to both the per-occurrence limits (which set a maximum for the amount the insurer will pay per claim) and the aggregate limits (which set a maximum for the amount the insurer will pay for all claims in the coverage period). In addition, look for any restrictions or exclusions that mean you won’t have any coverage in certain circumstances.

As there’s a lot to keep in mind, it helps to have a broker with expertise in the adult residential care space. Tangram provides insurance for adult residential care facilities through the Personal Care & Assisted Living Insurance Center (PCALIC).

We offer both general and professional liability insurance policies with limits of up to $2 million per occurrence/$4 million aggregate, usually with no deductible. Plus, our policy includes a $1 million abuse limit and up to $20,000 in medical payments coverage. We can also help you secure the employment practices liability coverage you need. Learn more.