After you buy a non-medical home care agency, first check that the liability policies include abuse and molestation coverage with a limit you can live with. Many policies exclude it or cap it low. Then check workers' compensation for caregivers, coverage for caregivers who drive clients in their own cars, professional liability for care mistakes and protection when a caregiver is accused of stealing from a client. This checklist is for searchers, Small Business Administration (SBA) loan buyers and holding companies that just closed on an in-home senior care business.
The short answer
- Abuse and molestation coverage is often excluded or sublimited. Confirm it exists, how much it pays and whether claims about the seller's era are covered.
- Caregiver injuries from lifting, falls and car crashes are the main workers' comp exposure. Check how caregivers are classified and paid.
- Caregivers driving clients in their own cars need hired and non-owned auto coverage on the agency's side, and their personal policies may exclude the work.
- Missed visits, care plan errors and falls during assistance are professional liability claims that general liability may not cover.
- A standard employee theft policy covers the agency's own money. Theft from a client's home needs coverage written for client property.
Does the agency have abuse and molestation coverage, and how much?
This is the highest-severity question in home care. Caregivers work alone with vulnerable older adults in private homes, and allegations of physical, sexual or emotional abuse can lead to large claims against the agency for negligent hiring, training or supervision. Many general liability and professional liability policies exclude abuse and molestation entirely. Others cover it with a sublimit well below the main limit, or with defense costs inside that sublimit.
Read the policy for five things:
- Is abuse and molestation covered at all?
- What are the per-claim and total limits?
- Do defense costs reduce the limit?
- Is the coverage claims-made?
- Are there conditions, such as background checks for every caregiver?
Claims-made coverage only responds to claims first made while it is in force and about events after its retroactive date (the earliest date of acts the policy covers). If a new policy sets that date at your closing, an allegation about a caregiver's conduct before closing may not be covered. In a stock purchase the agency's own policy may continue, but check its change in control terms. In an asset purchase, ask whether the seller bought tail coverage, which protects the seller rather than you, since a family may sue your agency too. Then ask your carrier whether your policy can cover claims about the seller's era. That usually takes both an earlier retroactive date and wording that treats the seller's business as a predecessor. See prior acts and tail coverage after an acquisition.
How are caregiver injuries covered?
Through workers' compensation, which is often the most frequent source of claims in home care. Caregivers lift and transfer clients, slip in bathrooms, get bitten by pets and drive between visits. Workers' comp is required for most employers in most states; Texas lets most private employers opt out, and Ohio, Washington, North Dakota and Wyoming require coverage through a state fund. The seller's experience rating (the factor that adjusts premium for past claims) usually follows the business to you, even in an asset purchase.
The classification of caregivers matters as much as the policy. Some agencies employ caregivers on payroll; others run a registry model that treats caregivers as independent contractors. Do not assume a caregiver paid on a 1099 is outside workers' comp. Insurers can add uninsured workers to premium at audit, and state law decides who counts as an employee. Wage and overtime rules for home care workers have also shifted at the federal and state level, so ask employment counsel how the seller paid travel time and overtime. See contractors and the workers' comp audit and inherited wage and hour exposure.
What happens when a caregiver drives a client?
Driving clients to appointments and errands is common in home care, and it is often done in the caregiver's own car. The caregiver's personal auto policy usually responds first, but it may carry low limits and some personal policies exclude carrying people for a fee or other business use. If a client is hurt, the agency will likely be sued too.
Hired and non-owned auto liability can protect the agency, subject to its terms, when it is sued over an accident in a vehicle it does not own, such as an employee's car. It usually sits above the caregiver's own policy and does not cover damage to the caregiver's car. It also usually protects only the agency, not the caregiver personally, unless the policy adds an endorsement that makes employees insureds. Check that the agency has it, at a limit that fits, and that an umbrella sits over it. Then set driving standards: motor vehicle record checks, proof of personal auto insurance at minimum limits you set, and a written policy on when caregivers may drive clients. See hired and non-owned auto.
A hypothetical example. A caregiver drives a client to a medical appointment in her own car and causes a crash. The client is badly hurt and the claim reaches $400,000. The caregiver's personal policy pays its $50,000 limit. The family then sues the agency for the rest. With hired and non-owned auto at $1,000,000, the agency's policy can respond to the remaining claim, subject to its terms. Without it, the claim falls on the agency's balance sheet. The numbers are illustrative.
Do I need professional liability for non-medical care?
Usually yes. Claims in home care often allege poor care rather than a sudden accident: a missed visit, a care plan not followed, a fall during a transfer, a medication reminder gone wrong. General liability may exclude professional services, so agencies typically carry professional liability, often packaged with general liability and abuse coverage in a home care program. See the professional liability review.
Check that the policy's description of covered services matches what caregivers really do. If caregivers administer medications or do wound care when the agency is licensed for non-medical care only, the policy may treat those acts as outside coverage, and a state regulator may treat them as outside the license.
What if a caregiver steals from a client?
Theft and financial exploitation claims are common in home care, and they catch new owners off guard. A standard crime policy's employee theft coverage protects the agency's own money and property. Covering a client's jewelry or bank account takes coverage written for client property. In the 2022 Insurance Services Office (ISO) crime forms this is a separate part called employee theft of clients' property; other forms use a third-party or client coverage endorsement.
Agencies often tell clients they are "bonded". Ask what that means in your file. A crime policy that covers client property pays for covered theft of the client's property under its terms. Many agencies that say they are bonded carry a business service bond, which often has a low limit and may pay only after the caregiver is convicted or admits the theft. Other bonds work like surety bonds, where the surety may expect the agency to repay it. Read which one you have and its conditions.
One condition to know. Coverage for a given employee generally ends once a designated person at the agency learns of that employee's dishonesty. Keeping a caregiver after a theft incident can leave that person uncovered. See the crime insurance review and employee theft for new owners.
Do the license and payer contracts come with the agency?
Not always. Many states license home care agencies, and some treat a change of ownership as needing a new license or advance notice. Payer and referral relationships, such as Medicaid waiver programs, veterans' programs, long-term care insurers and senior living communities, may need their own notices or new agreements, and many of them set minimum insurance limits and additional insured requirements. Ask healthcare regulatory counsel about the license, and read the contracts against your policies; see checking customer contracts against your policies.
Client files also hold health details, birth dates and payment information. Whether federal health privacy rules apply depends on how the agency bills and operates, so ask counsel. Either way, a cyber policy can help with breach response costs, depending on its terms. See the cyber review.
What belongs on my first-month checklist?
| Check | Why it matters in home care | Ask for |
|---|---|---|
| Abuse and molestation coverage | Most severe claims; often excluded or sublimited | Full policy wording, sublimits, retroactive date |
| Professional liability | Care plan, missed visit and fall claims | Policy, description of covered services |
| Workers' comp | Lifting, fall and driving injuries | Policy, experience rating worksheet, caregiver classification |
| Hired and non-owned auto | Caregivers driving clients | Auto or package policy, driving policy, driver checks |
| Client property crime coverage | Theft and exploitation allegations | Crime policy and any client property endorsement |
| Cyber | Client health, birth date and payment data | Cyber policy, application, data controls |
| Umbrella | Large injury claims | Which policies it sits over (often not professional or abuse coverage) |
| Licenses and payer contracts | Change of ownership rules and insurance requirements | License, payer and referral agreements |
| Loss runs | Shows past abuse, injury and theft claims | Five years of loss runs for every policy |
For how to read the claims history, see how to read loss runs. A Morrow review can line up the abuse, auto and crime terms against how your caregivers actually work and request quotes where it makes sense.
Keep reading
- Prior Acts and Tail Coverage After an Acquisition: Who Pays?
- New Owner Review: Professional Liability (Errors and Omissions)
- New Owner Review: Commercial Crime and Employee Theft
- Do 1099 Contractors Count in Your Workers' Comp Audit?
- Wage and Hour Exposure You Inherit From the Seller
- All guides for new business owners
Frequently asked questions
Does general liability cover abuse claims against my caregivers?
Often not, or only with a low sublimit. Many general liability and professional liability policies exclude abuse and molestation unless it is added back. Read the policy wording for the limit, the aggregate, whether defense costs reduce the limit and any background check conditions.
Are my caregivers covered when they drive clients in their own cars?
The caregiver's personal auto policy usually responds first, but limits may be low and some personal policies exclude business use. Hired and non-owned auto liability can protect the agency if it is sued, depending on the policy terms. It usually does not pay for damage to the caregiver's car.
What does it mean when a home care agency says it is bonded?
It can mean different things. Some agencies carry crime insurance that covers theft of client property, which pays for covered theft under its terms. Others carry a business service bond, which often has a low limit and may pay only after the caregiver is convicted or admits the theft. With some bonds, the surety expects the agency to repay it. Check which one you have, its limit and its conditions.
Do I need workers' comp for caregivers paid as independent contractors?
Possibly. Paying someone on a 1099 does not settle the question. State law decides who is an employee, and insurers can add uninsured workers to premium at audit. Ask employment counsel to review the seller's model before you rely on it.
Will my home care license transfer when I buy the agency?
It depends on the state and the deal structure. Some states require a new license or notice for a change of ownership, and payer contracts may have their own rules. If you have not confirmed it yet, ask healthcare regulatory counsel now, since some states set notice deadlines tied to the closing date, and keep your insurer informed.
References
- IRMI: Need To Know: Major Changes to the ISO Commercial Crime Program
- NCCI: Workers Compensation and Employers Liability Insurance Policy WC 00 00 00 C (carrier-hosted copy)
- IRMI: Retroactive date (definition)
- NCCI: ABCs of Experience Rating
Just bought a business? Get your insurance reviewed.
Send Morrow the declarations pages, loss runs and key contracts you inherited. Morrow can review them against the business you bought, flag gaps and request quotes where it makes sense. Any new terms depend on carrier underwriting.
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This article is general information, not legal, tax or financial advice, and not a coverage determination. Coverage depends on the actual policy wording, carrier underwriting, your purchase agreement and your contracts. Ask your attorney and accountant about deal and legal questions.