Running a home healthcare business means you're responsible for people's well-being in their most vulnerable moments. That's rewarding work, but it also comes with serious liability exposure. A missed medication, an employee's car accident on the way to a client's house, or a data breach exposing patient records—any of these could cost your business tens of thousands of dollars without the right insurance protection.
Here's what surprises most home healthcare owners: insurance requirements aren't just about following the law. Sure, most states require workers' compensation if you have employees. But the real financial exposure comes from client contracts, Medicare certification requirements, and the everyday risks that aren't legally mandated but are absolutely necessary to cover. This checklist walks you through exactly what you need, what's optional but smart, and when to add coverage as your business grows.
Essential Coverage: What Every Home Healthcare Business Needs
Let's start with the non-negotiables. These four coverages form the foundation of your insurance program, and most home healthcare businesses can't legally operate or sign client contracts without them.
Professional liability insurance (also called medical malpractice or errors and omissions) protects you when something goes wrong with the care you provide. Think medication errors, missed appointments that lead to health complications, or allegations of negligence in treatment. While not always required by state law, you'll need this coverage to work with Medicare-certified agencies, hospital partnerships, and most private-pay clients who require proof of insurance. Defense costs alone can run $50,000 to $100,000 even if you win the case—professional liability covers both legal fees and settlements.
General liability insurance handles the physical risks of working in clients' homes. An aide trips over a rug and breaks a family heirloom, a patient falls during assisted mobility and breaks a hip, or you accidentally damage plumbing while helping a client bathe—general liability covers property damage and bodily injury claims. This coverage typically costs around $1,900 annually and is often required to sign commercial leases or client contracts.
Workers' compensation is legally required in most states if you have employees. It covers medical bills and lost wages when your employees get injured on the job—and in home healthcare, back injuries from patient transfers are extremely common. The average cost runs about $154 per month, or roughly $2.79 per $100 of payroll. States like California, Pennsylvania, and New York require workers' comp with just one employee, while Florida requires it at four employees. Don't skip this one—operating without required workers' comp can result in hefty fines and even criminal penalties.
Hired and non-owned auto insurance covers your business when employees use their personal vehicles or rental cars for work purposes. Your home health aides drive to multiple client homes daily—if they cause an accident en route, the injured party can sue both the employee and your business. This coverage fills the gap between the employee's personal auto policy and your business liability, protecting you from vicarious liability claims that could otherwise bankrupt your agency.
Optional But Smart: Coverage That Protects Your Business's Future
Once you've got the essentials covered, these additional policies protect against risks that aren't required but can absolutely devastate an unprepared business.
Cyber liability insurance protects your business from data breaches and cyberattacks. Home healthcare agencies handle incredibly sensitive information—Social Security numbers, medical histories, payment details. A single ransomware attack or laptop theft could expose hundreds of patient records, triggering notification requirements, regulatory fines, and lawsuits. As telehealth becomes more common, your digital risk exposure grows. Cyber coverage can often be added to a business owner's policy or general liability policy at reasonable cost, and it's worth every penny in our increasingly connected world.
Employee dishonesty coverage (also called fidelity bonds) reimburses clients if your employees steal from them. This includes both physical theft and unauthorized access to financial accounts or data. When you're sending caregivers into people's homes—often to help with finances, medications, and personal care—this coverage protects both your clients and your reputation. If an employee steals jewelry or drains a client's bank account, the bond pays the claim while you deal with the employee situation.
Umbrella liability coverage adds an extra layer of protection above your general and professional liability limits. For a relatively low premium, umbrella policies provide $1 million to $5 million in additional coverage that kicks in when your underlying policies are exhausted. If you face a catastrophic claim—say, a patient dies due to alleged negligence and the family sues for $3 million—your umbrella policy could save your business from bankruptcy.
Employment practices liability insurance (EPLI) defends against employee lawsuits for discrimination, wrongful termination, harassment, or retaliation. Healthcare is a high-turnover industry, and even businesses with excellent HR practices face employment claims. EPLI covers defense costs and settlements, protecting you from claims that could otherwise drain your operating capital.
When to Add Coverage: Triggers That Mean It's Time to Expand Protection
Your insurance needs evolve as your business grows. Here are the key milestones that should trigger an immediate insurance review.
When you hire your first employee, you'll need workers' compensation in most states. But you should also increase your general liability limits and add EPLI coverage. That first hire changes you from a sole proprietor to an employer with all the liability that entails.
When you start offering telehealth services, add telehealth liability coverage to your professional liability policy. Miscommunication or misdiagnosis during virtual visits creates unique risks that traditional professional liability may not fully cover. Insurers now offer specific endorsements for telehealth that close these gaps.
When you pursue Medicare certification or hospital partnerships, review your professional liability limits. These contracts often require minimum coverage amounts—typically $1 million per occurrence and $3 million aggregate. Make sure your policy meets their requirements before signing contracts.
When you expand to a new state, check that state's specific requirements. Workers' compensation rules vary dramatically by state, and some states have unique licensing or insurance requirements for home healthcare agencies. Don't assume your current coverage automatically extends to new locations.
Annual Review Items: Your Insurance Policy Maintenance Checklist
Set a reminder to review your insurance coverage every year, even if nothing dramatic has changed. Insurance markets shift, your business evolves in small ways that add up, and regulatory requirements change. Here's what to check annually.
Verify your employee count and total payroll match your workers' compensation policy. Misreporting payroll can trigger audits and surprise bills—or worse, leave you underinsured. For 2026, small business health insurance premiums are increasing by a median of 11%, so budget accordingly for rising insurance costs across the board.
Review your professional and general liability limits. As your business grows and healthcare costs rise, claims severity increases. That $1 million policy that felt adequate three years ago might not be sufficient now. Consider whether an umbrella policy makes sense given your current revenue and client base.
Update your cyber liability coverage based on current data exposure. How many patient records do you now maintain digitally? Are you storing more information in cloud systems? Have you added telehealth platforms? Each of these changes increases your cyber risk and may warrant higher coverage limits.
Confirm your hired and non-owned auto coverage reflects your current employee driving exposure. More employees making more home visits means more auto liability exposure. Make sure your limits keep pace with your growth.
Check whether any client contracts or state regulations now require coverage you don't currently carry. Requirements change, and you don't want to lose a major contract because your insurance doesn't meet their updated standards.
How to Get Started: Building Your Home Healthcare Insurance Program
Start by listing your current employee count, annual payroll, number of clients served monthly, and services offered. This information helps insurers accurately quote your coverage. Then prioritize the essential four: professional liability, general liability, workers' compensation (if you have employees), and hired/non-owned auto.
Many insurers offer business owner's policies (BOPs) that bundle general liability, property insurance, and business interruption coverage at a discount. Ask about package options that combine professional liability, general liability, and cyber coverage—you'll often save 15% to 25% compared to buying each policy separately.
Work with an insurance broker who specializes in healthcare businesses. They understand the unique exposures of home healthcare and can access specialized markets that offer competitive rates for your industry. Generic business insurance agents might not know that home healthcare has specific class codes, coverage needs, and risk profiles that differ from other service businesses.
Protecting your home healthcare business isn't just about checking regulatory boxes—it's about making sure one bad incident doesn't destroy the business you've built. Start with the essentials, add optional coverage as your budget allows and your risk exposure grows, and review your program annually. The peace of mind alone is worth the investment, and when a claim does happen, you'll be grateful you planned ahead.
