Running a senior care or assisted living facility means you're responsible for some of the most vulnerable people in your community. You're also facing one of the highest liability exposures in healthcare. The average malpractice claim against an assisted living facility costs $221,496—and that's just the average. Elopement claims average $325,561, and failure to follow physician orders runs $323,325. One serious incident can threaten everything you've built.
Professional liability insurance—often called malpractice insurance—protects your facility when things go wrong with resident care. This isn't optional coverage. It's the safety net between a lawsuit and financial ruin. Here's what you need to know to protect your facility, your staff, and your residents.
What Professional Liability Insurance Covers
Professional liability insurance covers claims arising from the care you provide to residents. This includes allegations of negligence, errors in judgment, failure to provide adequate care, and injuries resulting from staff actions or inactions. The coverage pays for legal defense costs, settlements, and judgments up to your policy limits.
The most common claims against senior care facilities tell a sobering story. Resident falls account for 42.7% of all claims paid. Pressure ulcers make up 18.6%. Improper care excluding falls accounts for another 14.7%. Other frequent claims include medication errors, delayed medical treatment, failure to follow physician orders, and resident elopement.
Here's what surprises many facility operators: your general liability policy doesn't cover these claims. General liability handles slip-and-fall injuries to visitors or property damage. Professional liability specifically covers claims arising from the care services you provide. You need both types of coverage.
Claims-Made vs. Occurrence: Why This Matters
Most professional liability policies for senior care facilities are written on a claims-made basis. This is crucial to understand because it determines when you're covered. With a claims-made policy, both the incident and the claim must occur while your policy is active. If a resident falls in January 2025 while you're insured with Carrier A, but their family doesn't file a lawsuit until January 2027 after you've switched to Carrier B, you have a problem. Carrier A won't cover it because the claim wasn't filed during their policy period. Carrier B won't cover it because the incident didn't happen during their policy period.
This is where tail coverage becomes critical. An extended reporting period endorsement—the technical name for tail coverage—extends your ability to report claims for incidents that occurred during your policy period, even after the policy has expired or been canceled. If you close your facility, retire, or switch insurance carriers, you'll likely need tail coverage to protect yourself from claims filed after your policy ends.
Tail coverage is expensive—typically 175% to 200% of your annual premium. If you're paying $30,000 per year for coverage, expect to pay $52,500 to $60,000 for tail coverage. Some policies offer unlimited tail coverage allowing claims to be reported at any time in the future, while others limit the reporting period to a specific timeframe like three to five years.
Occurrence policies offer an alternative. These provide lifetime coverage for incidents that occurred while the policy was in effect, regardless of when the claim is filed. You don't need tail coverage with an occurrence policy. However, occurrence policies are less common in the senior care space and typically cost more upfront than claims-made policies.
Policy Details That Impact Your Protection
The consent to settle clause determines whether your insurance carrier can settle a claim without your approval. Some policies give the carrier full authority to settle. Others require your consent before settlement. This matters when you're facing a questionable claim that could damage your facility's reputation. If you have consent to settle protection, you can force the carrier to defend the claim in court rather than settling quickly. However, if you refuse a reasonable settlement and the judgment exceeds what the carrier wanted to settle for, you may be responsible for the difference.
Defense costs are another critical policy feature. Some policies pay defense costs in addition to your policy limits. Others include defense costs within your limits, meaning every dollar spent on attorneys reduces the money available for settlements or judgments. This distinction becomes huge in a complex claim that requires extensive legal work. A case that costs $200,000 to defend and settles for $300,000 will cost you $500,000 with defense-outside-limits coverage but could exceed a $500,000 policy limit with defense-within-limits coverage.
Coverage limits need careful consideration. The average severity of general and professional liability claims in senior care is $216,000, but averages hide the real risk. Claims for elopement, failure to follow physician orders, and delayed medical treatment routinely exceed $300,000. Many states require minimum coverage levels based on your licensed bed count. Virginia, for example, requires at least $250,000 for facilities with 25 or fewer residents, with higher amounts for larger facilities. Your actual needs likely exceed these minimums. Most facilities carry $1 million per occurrence with $3 million aggregate limits as a baseline.
State Requirements and Regulatory Landscape
Senior care facilities face state-level regulation, which means insurance requirements vary significantly by location. States set their own licensing requirements, minimum coverage amounts, and operational standards. Some states mandate specific professional liability coverage amounts tied to bed capacity. Others require facilities to maintain insurance but don't specify minimum amounts. All require you to provide proof of coverage upon request.
The regulatory environment continues to evolve. New emergency management standards took effect in July 2025, requiring detailed risk analysis, clear emergency plans, and specific communication protocols. These operational requirements influence your liability exposure and, consequently, your insurance needs. Facilities that demonstrate strong risk management practices, comprehensive staff training, and robust safety protocols often qualify for better insurance rates.
Getting the Right Coverage for Your Facility
Start by understanding your specific risk profile. The type of care you provide, your resident acuity levels, your staff-to-resident ratios, and your claims history all influence your coverage needs and costs. Assisted living facilities face different risks than skilled nursing facilities, though both need comprehensive professional liability protection.
Work with an insurance broker who specializes in senior care facilities. The nuances of claims-made policies, tail coverage, consent to settle provisions, and defense cost structures require expertise. A specialist can help you evaluate competing quotes on equal footing and identify coverage gaps that could leave you exposed.
Review your coverage annually, not just when your policy renews. Changes in your facility—adding memory care services, increasing bed count, expanding into home health—all affect your liability exposure. Your insurance needs to keep pace with your operations. Also consider umbrella or excess liability coverage to provide an additional layer of protection above your primary policy limits.
Professional liability insurance is expensive, but uninsured claims are devastating. With claim frequency increasing roughly 3% per year and average loss per occupied bed rising 6% annually, the cost of going bare far exceeds the cost of comprehensive coverage. Protect your facility, your staff, and most importantly, your ability to continue serving the seniors who depend on you.
