From an underwriting perspective, there are both pros and cons to the long-term adult home care industry - nursing homes, assisted living facilities, and independent living facilities.
Currently, the market is evolving in response to several factors:
As a result, a market is taking hold in which private homeowners are renting out rooms to those looking to meet demand and operate their own long-term adult home care facility. The rentals can be anything from a few rooms to entire houses that are converted into long-term care facilities. Levels of care vary depending on the facility, but doctors, nurses, and certified nursing assistants (CNAs) come in and attend to patients as they would in a licensed building. Agents must ensure that clients opening these businesses carry the appropriate insurance.
for insurance companies to insure these properties.
There are specific risks to insurance companies that underwriters need to consider as this market grows and the opportunity to insure these properties presents itself:
There’s an obvious problem if a personal lines insurance provider is unknowingly insuring a long-term care facility. Once a privately owned home becomes a long-term adult care facility, it essentially becomes a commercial property with all the liability associated with that type of business. Unless personal lines carriers can provide commercial liability protection or verify commercial coverage, these types of facilities could significantly impact company results.
Commercial lines carriers must ensure they are charging enough for these types of facilities. Let’s say you insure a duplex for commercial use and the coverage is general liability. If you can’t be sure what that facility is actually being used for and it turns out to be a long-term care facility, your exposure is greater and you stand to lose money. Commercial providers can add more premium or take away coverage in this instance to make it less dangerous for themselves.
As with any health-based facility today, there are risks related to virus transmission. In a scenario in which someone at a long-term care facility passes due to COVID-19, there would be various implications for the insurer – whether they are a personal lines or commercial lines carrier. It can be argued that improperly insuring a long-term care facility could lead to lawsuits over gross negligence. This issue could become particularly risky in places like Washington State, where some home care facility workers continue to remain exempt from vaccine mandates.
Despite these risks, there is good news: this is not an uninsurable situation. With the right information, underwriters and their insurance companies can make it work.
For underwriters, BuildingMetrix Adult Family Home Check empowers you to reduce the risk of a home-based, uninsured long-term care facility unknowingly ending up in your book of business. Our comprehensive database lets you see which addresses in your book match a long-term care facility property.
All you need to run a report is a street address, city, state, zip code, and reference number of your choice to identify the returns when they come back. BuildingMetrix doesn’t require any personal information or policy numbers. We take your book of addresses and will return a list of all adult home care facilities, if any exist, within that book. The process is fast, secure, and affordable.
We currently possess data sets for multiple states, accessible for a nominal charge. If you’re a WSRB subscriber, data for the state of Washington is included with your subscription.
Get valuable property risk assessment data and convenient delivery methods now.
[1] King 5 News, https://www.king5.com/article/news/health/washington-long-term-care-facilities-face-staffing-shortage-crisis/281-6dea28d5-2dc0-4218-b1e8-3ce768b479fc
[2] American Health Care Association, https://www.ahcancal.org/News-and-Communications/Fact-Sheets/FactSheets/Workforce-Survey-September2021.pdf
[3] Seattle Times, https://www.seattletimes.com/seattle-news/health/thousands-of-washington-home-care-workers-represented-by-seiu-775-remain-exempt-from-gov-inslees-vaccine-mandate/