The importance of preparing for your care home insurance renewal

Allowing adequate time to prepare for your care home insurance renewal has always been important. With the reaction of the insurance market in the wake of the Covid-19 pandemic, with cover restrictions and significant rate increases for Social Care providers, preparing for your insurance renewal in good time is vital in order to obtain satisfactory terms.

At Howden we do not operate a ‘one size fits all’ approach. We know that care homes are different in terms of the support provided, the residents you look after and the way you deliver care, whether this is through the latest technology or the more intense 1-2-1 services and care packages. Furthermore, the scale of support needed can differ and the environments in which care is provided can range from listed properties to the latest new build homes.

When preparing for your renewal, the areas to give consideration and time are noted below:

Early engagement

With a difficult insurance market, it is essential to allow more time to prepare for your renewal. Engage with your broker at least 60 days in advance of renewal, if you have not heard from them by that point, and ensure your current provider is going to be offering renewal terms as not all Insurers are. Your insurance broker may potentially be speaking to more than one insurer this year in order to seek competitive terms, and this may take some time. Insurers may also be asking for additional information from you this year, such as documentation on your infection control procedures, so make sure you plan in time to complete additional forms.

Covid-19 Reporting

Ensure you have information to hand and you can discuss any incidents of Covid amongst your service users and staff with your broker. These may still need to be reported to Insurers before your renewal date and will be a ‘material fact’ for any new Insurer who is looking to provide you with terms.

Importance of your CQC inspections

Insurers may be less willing to either offer terms at all or to offer competitive terms where the latest inspection rating is ‘inadequate’ or ‘requires improvement’. Insurers consider such ratings to increase the likelihood of potential claims. If the CQC have given you such rating, early engagement with your broker is essential. Make sure that your action plan is available with surrounding commentary on improvements that have been made.

Additional areas of risk

Standard business insurance will not include specific protections that exists in the care sector, this could leave your business, staff and service users exposed. Areas to consider include:

• Medical Malpractice or treatment risk – There is a difference between these two descriptions. Malpractice cover includes protection for diagnosis and prescription services, whereas ‘treatment risk’ provides protection for ‘errors and omissions’ in the provision of medical services with a specific exclusion around diagnosis and prescription services. Most providers will be fully protected with ‘treatment risk’ protection but if you employ or use prescription nurses you may need to consider your exposures and insurance protections further.

• Public Limits of Liability – Most commissioners will required you to carry a minimum of £10M Public Liability protection, this cover can extend to include the ‘treatment’ protection with inner limits often applying. Our recommendation would be to carry a minimum of £5M limit of protection for the ‘treatment’ covers. 

• Buildings sum insured – This is a crucial aspect of the protection you put in place. It is important you regularly review your sums to ensure you are adequately protected. During 2022, rebuilding cost inflation will be 9.6%. Construction material costs reached a 40 year high in November 2021, and labour and materials costs are expected to continue to rise throughout 2022.[1] Howden can assist with a free desktop indication of adequacy of your building sum insured.

• Business Interruption - The indemnity period selected needs to allow for the current shortages of both labour and materials in the building trade. A repair or reinstatement may be delayed by many months as there may be no available contractors. Such delays need to be built into your chosen indemnity period. When calculating your sum insured, you need to allow for future growth expected in your income from fee uplifts and occupancy levels. Increases and projections should be at a minimum on revenues expected at least two years into the future.

Additional covers

We encourage you to consider the following additional covers to help protect you and your business:

• Commercial Legal Expenses - Provides protection for your business against legal disputes and costs. This covers costs of solicitors, court proceedings and barristers. Cover will further extend to include legal helplines.

• Directors' & Officers' Insurance - This cover provides protection against the cost of compensation claims against directors of the business, key staff and the entity of the business for alleged wrongful acts. Wrongful acts are wide ranging but include things like breach of duty, breach of trust, neglect or error and wrongful trading.

• Engineering Inspection - Statutory inspection at regulated periods are dictated by LOLER regulations. Things like passenger lifts, for example, are required by law to be inspected on a regular basis.

• Cyber Insurance - Ransomware attacks are increasing in frequency and severity, with phishing emails remaining one of the primary methods for delivering an attack. 31% of businesses estimate they were attacked at least once a week. One in five Businesses (20%) say they experienced a negative outcome as a direct consequence of a cyber-attack, while one third of businesses (35%) experienced at least one negative impact.[2]

Finally, be aware of potential new limitations or exclusions within your renewal terms. Set time aside to review documents carefully with your broker. They will be able to carefully review the terms with you, pointing out any changes in cover and their potential consequences.

At Howden we have a team of experienced account handlers who can help advise you at this difficult time. Contact Howden’s expert team on: 0117 2051850 for more information. If in doubt, always call your broker to discuss, even if your renewal is not due yet.