Running a senior care or assisted living facility means you're responsible for some of the most vulnerable people in your community. That's a privilege, but it also comes with significant liability exposure. One slip and fall, one medication error, one accusation of neglect—and you could be facing a lawsuit that threatens everything you've built. Here's the reality: the Bureau of Labor Statistics reports that senior care facilities experience injury rates over four times higher than construction or manufacturing. The average cost of a single workers' compensation claim? $36,551. You need the right insurance coverage, and you need to review it regularly.
This checklist breaks down exactly what coverages you need, what's optional but smart to have, when to add new policies, and what to review every year. Whether you're opening your first facility or managing multiple locations, use this as your roadmap to proper protection.
Essential Coverage: The Non-Negotiables
These are the coverages you absolutely must have from day one. Skip any of these and you're either breaking the law or putting your business at catastrophic risk.
General Liability Insurance protects your facility when residents, visitors, or vendors get injured on your property. A resident slips on a wet bathroom floor? General liability. A family member trips over a cord in the hallway? General liability. This coverage handles legal defense costs, medical expenses, and court awards for third-party bodily injuries and property damage. Most facilities carry limits of $1 million per occurrence with a $2-4 million aggregate.
Professional Liability Insurance (also called malpractice or errors and omissions insurance) is different. This covers claims arising from the care you provide—medication errors, improper assistance with activities of daily living, allegations of negligent care, or failure to properly supervise residents. If a resident falls because a staff member didn't follow the care plan, that's professional liability. If a medication mix-up causes harm, that's professional liability. Standard limits run $1 million per claim with $3 million aggregate, and most policies include tail coverage options so you're protected even after you close or sell.
Workers' Compensation is required by law in almost every state if you have employees. This covers medical expenses and lost wages when your staff gets injured on the job. And they will get injured—caregiving is physically demanding work. Back injuries from lifting residents, slips in wet areas, needlestick exposures—these are common events in senior care. Workers' comp also protects you from lawsuits, since employees generally can't sue you directly if they're covered. Different employee types use different classification codes (8810 for office staff, 7380 for maintenance and drivers), which affects your premium.
Commercial Property Insurance protects your building, equipment, furniture, and supplies from fire, theft, vandalism, and weather damage. If your facility burns down or gets hit by a tornado, this coverage rebuilds. Make sure your policy includes business interruption coverage, which replaces lost income if you have to temporarily close for repairs.
Optional Coverage That's Worth Considering
These coverages aren't legally required, but they address real risks that can sink your business just as quickly as a malpractice lawsuit.
Employment Practices Liability Insurance (EPLI) protects you from lawsuits filed by employees alleging discrimination, wrongful termination, sexual harassment, or retaliation. Healthcare has some of the highest EPLI claim rates of any industry. One disgruntled employee can cost you hundreds of thousands in legal fees and settlements even if you did nothing wrong.
Abuse and Misconduct Coverage is becoming essential rather than optional. Allegations of physical, sexual, or emotional abuse by staff members can destroy your reputation and trigger massive lawsuits. Standard general liability and professional liability policies often exclude abuse claims, so you need specialized coverage. Given the current litigation environment, this is one you should seriously consider.
Cyber Liability Insurance addresses data breaches, ransomware attacks, and HIPAA violations. Your facility stores protected health information for every resident—names, birthdates, Social Security numbers, medical histories, payment information. If hackers steal that data or you accidentally expose it, you face notification costs, credit monitoring expenses, regulatory fines, and lawsuits. Cyber policies typically cover breach response costs, legal fees, and regulatory penalties.
Commercial Auto Insurance is necessary if your facility owns vehicles—vans for resident outings, maintenance trucks, company cars. If you require staff to use personal vehicles for facility business (pharmacy runs, supply pickups), you need hired and non-owned auto coverage to fill gaps in their personal policies.
Umbrella/Excess Liability sits on top of your general liability and professional liability policies, kicking in when you exhaust those limits. If you face a catastrophic claim—say a resident dies due to alleged negligence—settlements can easily exceed $1 million. Umbrella policies provide an additional $1-5 million (or more) in coverage for relatively low premiums.
When to Add or Expand Coverage
Your insurance needs change as your business grows. Here's when to revisit your coverage.
Adding a Memory Care or Dementia Unit? These higher-acuity services dramatically increase your liability exposure. Residents with cognitive impairment are more likely to wander, fall, or become aggressive. Insurers charge $700-$1,500 per occupied bed annually for memory care units versus $500-$1,200 for standard assisted living. Make sure your professional liability policy explicitly covers memory care, behavioral health, and dementia services.
Expanding Your Facility or Opening a Second Location? Notify your insurance carrier immediately. Your property insurance needs to reflect the new building value and contents. Your liability limits may need to increase. If you're operating in multiple states, you'll need to comply with different workers' comp laws and licensing requirements.
Hiring More Staff or Bringing in Contractors? Update your workers' comp policy every time your payroll changes significantly. If you're using independent contractors for nursing, therapy, or other care services, verify they carry their own professional liability insurance—otherwise claims against them may fall back on you.
Adding New Services? Starting to provide skilled nursing care, physical therapy, hospice services, or home health? Each new service line creates new liability exposures. Your current professional liability policy may not cover these services, or may exclude them entirely. Get specific coverage before you start billing for new services.
Annual Insurance Review Checklist
Set a recurring calendar reminder to review your insurance every year, ideally 90 days before your policies renew. Here's what to check:
Review your claims history. Did you have any incidents, even if you didn't file a claim? Near-misses count. If you're seeing patterns—lots of falls in a specific hallway, multiple medication errors on a certain shift—address the root causes and document your improvements for your insurer.
Verify your coverage limits still make sense. If your facility has grown or property values have increased, your current limits may no longer provide adequate protection. The median assisted living cost hit $70,800 per year in 2025—a 10% jump from the prior year. If you're not reviewing annually, inflation alone puts you at risk of being underinsured.
Confirm your property insurance reflects current replacement costs. Construction costs fluctuate dramatically. What it would have cost to rebuild your facility three years ago is likely very different from today's costs. Ask for a replacement cost valuation update.
Update your workers' comp payroll estimates. If you underestimate payroll, you'll face a big bill at audit. If you overestimate, you're overpaying premiums. Provide accurate current payroll figures for each employee classification code.
Check for new exclusions or endorsements. Insurers regularly change policy language, adding exclusions or requiring endorsements for certain coverages. Read your renewal documents carefully. If you see new exclusions for communicable diseases, cyber events, or abuse claims, ask about available coverage to fill those gaps.
Review state regulatory changes. Some states have implemented new insurance requirements for senior care facilities, increased minimum coverage limits, or changed workers' comp rules. Stay current on your state's requirements to avoid penalties or license issues.
Getting the Right Coverage in Place
Work with an insurance agent or broker who specializes in senior care facilities. General business insurance agents often don't understand the unique exposures you face. A specialist will know which carriers actively write senior care coverage, what endorsements you need, and how to structure your policies to avoid gaps.
Get multiple quotes, but don't choose solely on price. The cheapest policy often has the most exclusions, the lowest limits, or the worst claims service. Focus on coverage breadth, financial strength of the carrier (look for A.M. Best ratings of A- or higher), and the insurer's track record in your industry.
Document everything. Keep detailed records of your risk management programs—staff training, safety protocols, incident reports, quality improvement initiatives. Insurers reward facilities that demonstrate proactive risk management with better rates and more favorable terms. Plus, if you ever face a lawsuit, documentation of proper procedures can be your best defense.
