Protecting Your Home Health Agency: Essential Insurance Questions You Didn’t Know to Ask
Are you confident your home health care insurance is keeping pace with your business risks? In an industry experiencing explosive growth, having the right protection isn’t just a good idea—it’s a critical component of your agency’s success.
The home health and in-home caregiver industry is on a massive upward trajectory, predicted to grow a staggering 54% by 2026. This is a far cry from the average growth of just 7% across all other industries. While this expansion brings immense opportunities, it also introduces a unique set of challenges and exposures.
Navigating the maze of insurance coverage needed to protect your home health agency can feel overwhelming. At Wagley Agency Insurance Group, we’ve spent years helping agencies across the country find the right policies to match their specific needs. Along the way, we’ve heard countless questions from business owners—both new to the industry and seasoned veterans—who are looking for guidance.
To help you feel more confident in your coverage decisions, we’ve compiled answers to some of the most common and important questions we encounter. Let’s dive into the details you need to know.
1. How is the cost of my workers’ compensation insurance determined?
Workers’ compensation is a vital safety net for your employees, but its cost can be a major expense for your business. Insurance companies evaluate three key factors to determine your premium:
- Job Descriptions: The primary factor is the job classification code. For home health agencies, this is typically 8835 – Home Healthcare. This code signals a specific set of risks associated with your employees’ daily tasks, such as travel, lifting, and in-home care.
- Payroll Size: Your total payroll is a direct indicator of your agency’s size and the number of employees you have. The larger your payroll, the more exposure the insurance company assumes, which will directly impact your program’s cost.
- Experience MOD (Modification Factor): This is one of the most powerful—and often misunderstood—metrics. Your Experience Modification Rate, or EMR, is a number used by insurance carriers to compare your agency’s claims history against others in the same industry. An MOD of 1.0 is the industry average. If your MOD is below 1.0, it means your agency has a better-than-average safety record, which can lead to significant discounts on your premium. Conversely, an MOD above 1.0 signals a higher claims risk and will result in a surcharge. Keeping this number low is a strong incentive for a robust safety program.
2. What are the most common property claims in home healthcare organizations?
While your agency may not have a central office filled with valuable equipment, property risks still exist—and they can be significant. The most frequent claims we see include:
- Burglary and Theft: This can involve the theft of valuable office equipment like laptops, tablets, or medical devices. However, a major concern for home health is the theft of medications, supplies, or even sensitive client files that are stored or transported by employees.
- Employee Dishonesty: This goes beyond simple theft and can include the misuse or misappropriation of agency resources, from company credit cards to falsifying time sheets. It’s a subtle but costly risk that requires specific coverage.
- Water Damage: Whether it’s a burst pipe in your office or an appliance leak in a storage area, water damage can lead to expensive repairs, equipment loss, and business interruption. The hidden costs of mold remediation can also be a serious concern.
- Wind and Hail Damage: In regions prone to severe weather, this is a major risk. A hailstorm or high winds can cause costly damage to roofs, windows, and the exterior of your agency’s building.
3. Do I need Employment Practices Liability (EPL) insurance for my home health agency?
Absolutely. In a high-turnover industry like home healthcare, Employment Practices Liability Insurance (EPLI) is not just a luxury; it’s an essential shield. This coverage protects your agency from a wide range of management decisions, including claims related to:
- Wrongful termination
- Discrimination (based on age, race, gender, disability, etc.)
- Sexual harassment
- Failure to promote or hire
- Retaliation
What many agency owners don’t realize is that EPLI also protects against Third-Party Acts Liability. This is crucial in home health. It covers claims made by a third party—such as a client or a client’s family member—against your agency for alleged discrimination or harassment by one of your employees. For example, if a client accuses a caregiver of harassment, EPLI can help cover the legal defense costs.
4. Do I need cyber liability insurance for my home health agency?
Yes, you need it now more than ever. The increasing reliance on technology in home healthcare—from electronic health records (EHRs) to scheduling software—means your agency holds sensitive data on both clients and employees. This includes protected health information (PHI) regulated by HIPAA, financial data, and personal identifiable information (PII).
Cyber liability insurance is designed to protect your agency from the fallout of a data breach. If your data is compromised, you could be responsible for a number of expensive and time-consuming actions:
- Legal and regulatory fees: The cost of defending a lawsuit and paying fines from government bodies like the Department of Health and Human Services (HHS).
- Client notification and credit monitoring: The expense of notifying all affected individuals and providing them with identity theft protection services.
- Public relations and reputational damage: The cost of managing your agency’s image and restoring trust with clients and the community.
A data breach can be financially devastating. Cyber liability insurance is a non-negotiable part of a modern home health agency’s risk management strategy.
5. What other professional liability issues should I consider?
Professional liability, often called Errors and Omissions (E&O) insurance, is the bedrock of your home health agency’s protection. To ensure your coverage is adequate, you need to clearly define and review a few critical areas:
- Scope of Care: Is your agency focused on companion care (e.g., light housekeeping, errands, companionship) or do you offer skilled nursing services (e.g., wound care, medication administration, physical therapy)? These are fundamentally different risk profiles, and your policy must accurately reflect the services you provide.
- Included Services: A comprehensive policy will clearly define the specific services covered. Review this section carefully to ensure your full range of offerings is protected. Don’t assume everything is covered by default.
- Covered Professionals: It’s essential to understand who is covered under your policy. Does it include your licensed doctors, registered nurses, nurse practitioners, certified nursing assistants, or other licensed professionals? This can vary significantly by carrier and the specific policy.
6. What type of auto insurance do I need for my home health agency?
Protecting your agency from auto-related risks requires a multi-faceted approach. Your policy should include coverage for both owned and non-owned vehicles.
- Owned Vehicles: Any vehicles owned by your agency should carry no less than $1 million in liability coverage. In a serious accident, medical bills and legal fees can quickly exceed lower limits. You should also have comprehensive and collision protection to safeguard against a wide range of physical damage risks.
- Hired and Non-Owned Vehicles: This is one of the most critical and often-overlooked coverages for home health. It protects your agency when your caregivers are using their personal vehicles for business purposes—like driving to a client’s home or taking a client to an appointment. Without this coverage, your agency could be held liable for a serious accident, even if you don’t own the car.
7. What precautions can I take for employees driving their own vehicles?
Beyond having the right insurance, a proactive approach to driver safety can save your agency from costly claims and potential lawsuits. Here are some essential precautions:
- Ensure Hired and Non-Owned Liability is in Place: This is your agency’s primary protection. Make sure you have adequate coverage to protect your business’s assets.
- Require Personal Auto Insurance: Mandate that all employees using their personal vehicles for work carry their own personal auto insurance with at least 100/300 coverage limits ($100,000 per person and $300,000 per accident). This provides a layer of protection before your agency’s hired and non-owned coverage kicks in.
- Check Driving Records: Before hiring any new employee, who will be driving, run a check on their driving record using the National Driver Register or a similar service. This helps you screen for a history of reckless driving, multiple violations, or other red flags.
- Create a Fleet-Safety Policy: Even if you don’t own the vehicles, a clear policy on driver safety is vital. This can include rules about cell phone use, regular vehicle maintenance checks, and accident reporting procedures. Installing telematics or GPS trackers in company vehicles (if applicable) can also help you monitor driving behavior and encourage safer habits.
Protecting Your Agency, One Question at a Time
The home health industry is full of rewards, but also complex risks. From property damage and cyber threats to professional liability and vehicle accidents, a lot is on the line. The good news is that with the right insurance partner, you don’t have to navigate these waters alone.
By asking these critical questions and working with an agency that understands your unique needs, you can build a comprehensive insurance program that truly protects your business, your employees, and the clients you serve.Ready to review your coverage and feel confident in your agency’s protection? Contact Wagley Agency Insurance Group today for a personalized consultation.