You've done your research, you've found the perfect location, and you're ready to launch your senior care or assisted living business. But here's what catches most new operators off guard: you can't just open your doors and start accepting residents. Before your first resident moves in, you need the right insurance coverage in place—not just because it's smart business, but because many states won't let you operate without it.
Insurance for senior care facilities isn't like buying auto or home insurance. You're protecting vulnerable adults who depend on your care, which means the stakes are higher and the coverage requirements are more complex. The good news? Once you understand what you need and when to add it, you can build your insurance program strategically as your business grows.
Day One Coverage: What You Absolutely Need Before Opening
Before you accept your first resident, you need two foundational coverages that work together to protect your business: general liability and professional liability insurance.
General liability insurance protects you when someone gets injured on your property or when your facility causes property damage. Think slip-and-fall accidents, a resident's family member tripping over equipment in a hallway, or damage to a resident's personal property. This coverage typically starts at $1 million per occurrence with a $2 million aggregate limit, and some facilities opt for higher limits of $2 million per occurrence and $4 million aggregate.
Professional liability insurance—sometimes called errors and omissions or malpractice insurance—is what protects you when claims arise from the actual care you provide. If a resident falls because staff failed to follow the care plan, or if medication errors occur, or if there are allegations of negligent care, this coverage handles the legal defense costs and any judgments against you. This is non-negotiable coverage for senior care facilities, with similar limits to general liability.
You'll also need property insurance to protect your building, equipment, and furnishings. Budget $3,500 to $5,000 for your initial property and liability insurance during startup. After that, expect monthly insurance costs between $30 and $400, depending on your facility size, the services you offer, your location, and whether you've had any past claims.
Required Bonds and Workers' Compensation
Here's where state requirements get specific. Many states don't just recommend certain coverages—they legally require them before you can get licensed.
Patient Trust Bonds, also called Nursing Home Care Bonds, guarantee that your facility will comply with state and federal laws and handle residents' trust funds ethically and responsibly. If you're managing any money on behalf of residents—and most assisted living facilities do—you'll likely need this bond.
If you bill Medicare for durable medical equipment, prosthetics, or orthotics through your facility, you'll need a DMEPOS Bond (also called a Medicare Bond). This ensures you're billing Medicare appropriately and following all program requirements.
Workers' compensation insurance becomes mandatory as soon as you hire employees. State requirements vary—California requires it when you have three or more full-time workers, while other states require it with your first employee. Don't skip this coverage or try to delay it. The fines for operating without required workers' comp can shut down your business, and if an employee gets hurt, you could face devastating out-of-pocket costs.
Growth Phase Coverage: When to Add More Protection
As your senior care business grows, your insurance needs to grow with it. Here are the key triggers that should prompt you to add or increase coverage.
When you start transporting residents for medical appointments, shopping trips, or activities, you need commercial auto insurance. Your personal auto policy won't cover business use, and the liability exposure from transporting vulnerable seniors is significant.
If you're storing resident health information electronically or accepting online payments, add cyber liability insurance. Healthcare data breaches are expensive to resolve, with notification requirements, potential fines, and the cost of credit monitoring for affected individuals.
Abuse and molestation coverage has become essential for senior care facilities, unfortunately. Even with thorough background checks and training, allegations can happen, and defense costs alone can be crippling. This coverage protects your facility from claims of physical, emotional, or sexual abuse of residents.
Employment practices liability insurance (EPLI) becomes important once you have a larger staff. This covers claims of discrimination, sexual harassment, wrongful termination, and other employment-related lawsuits. As your headcount grows, so does your exposure to these claims.
Business interruption insurance protects your revenue if you have to temporarily close due to a covered event like a fire or natural disaster. When you're operating near capacity and depend on that monthly resident income, losing even a few weeks of revenue can be financially devastating.
Common Insurance Mistakes to Avoid
The biggest mistake new senior care operators make is choosing the cheapest insurance premium without understanding what's actually covered. A lower premium usually means something is missing—lower coverage limits, higher deductibles, or important exclusions. In 2026, with insurance costs rising across the board, this mistake is more tempting than ever, but it's also more dangerous.
Another common error is failing to update coverage as your services expand. If you started with basic residential care but now offer memory care or skilled nursing services, your original policy may not cover these higher-risk services. Review your coverage annually and whenever you add new services.
Many operators also underestimate how quickly their business can grow and don't increase their liability limits accordingly. Those initial $1 million limits that seemed adequate when you had six residents may be woefully insufficient when you're caring for thirty residents with complex medical needs.
Don't make the mistake of handling insurance on your own without expert guidance. Small and mid-sized senior care businesses rarely have dedicated risk managers or insurance expertise in-house. Partner with an insurance broker who specializes in senior care facilities—they understand the unique risks you face and can help you avoid coverage gaps that could destroy your business.
Getting Started: Your Next Steps
Start your insurance planning at least 60 to 90 days before your planned opening date. This gives you time to get quotes from multiple insurers, compare coverage options, and understand exactly what you're buying. Don't wait until the week before you need your license—insurance underwriting for senior care facilities takes time.
Check your specific state requirements early in the process. While most states don't have strict insurance mandates for residential care facilities, they do require those surety bonds, and some states have specific coverage requirements depending on the services you offer. Your state's licensing board can provide a checklist of required insurance and bonds.
Remember that insurance isn't just about meeting licensing requirements—it's about protecting the business you're building and the residents you'll serve. The right coverage gives you the financial stability to weather claims and continue providing quality care. Start with the essentials, plan for growth, and review your coverage regularly as your business evolves. Your future self will thank you for getting this foundation right from day one.
