Key Takeaways
- General liability insurance protects against injuries on your premises and lawsuits
- Professional liability insurance protects against negligent treatment claims
- Workers’ compensation covers medical expenses and lost wages for injured employees
- Property insurance covers costs to rebuild after damage like fires or storms
- Commercial auto policies cover vehicles used to transport clients and employees
- Cyber liability protects costs from data breaches involving client information
- D&O coverage protects personal assets of directors and officers from lawsuits
- EPLI protects against wrongful termination, harassment and other employment claims
Introduction
Residential facilities serving vulnerable individuals face unique risks that require specialized insurance protections. This guide outlines the top policies businesses in this industry should consider to safeguard their operations from costly injuries, lawsuits, and property losses.
General Liability Insurance
General liability insurance provides important coverage for residential facilities serving vulnerable populations. It protects them from financial injuries on the premises. It is especially crucial for facilities in the I/DD, mental health and substance abuse industries due to the nature of providing care and housing to clients and residents who may be at higher risk for accidents or injuries. General liability insurance also covers legal fees and penalties if the facility is sued for negligence, professional malpractice, or regulatory non-compliance. It reimburses costs for medical expenses, damage to client property, and claims of abuse or molestation. Pricing is estimated around $3 per bed based on facility size and safety protocols.
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Based on the industry’s average exposures and claims experiences, the estimated average annual pricing for general liability insurance would be around $2-5 per bed, with a minimum premium of $5,000. This pricing is calculated based on number of beds, claims history, safety protocols, staff training programs, and licenses/certifications held. Facilities with fewer incidents, robust safety measures, qualified personnel tend to receive favorably lower quotes.The average quoted price is around $3 per bed.
Estimated Pricing: $3/bed
Professional Liability Insurance
Professional liability insurance, also known as errors and omissions insurance, is an important coverage for residential facilities in the intellectual and developmental disability, mental health, and substance abuse sectors. It provides financial protection against lawsuits for alleged negligence, errors, or omissions in service delivery and care of residents. Key benefits of this insurance include protection from legal costs and damages if found liable, meeting requirements for government contracts, and maintaining normal operations in the event of a large lawsuit payout. Common claims addressed include medical malpractice, abuse/neglect, security issues, and injuries to residents. Estimated pricing is $2.50-$4.00 per bed annually depending on facility size and risk factors.
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Based on industry research and actuarial analysis of typical claims in the NAICS 6232 industry, the average estimated annual pricing for professional liability insurance would be in the range of $2.50 to $4.00 per bed, assuming no prior claims. This pricing takes into account the risk factors associated with this type of facility including the care of vulnerable populations and potential for injuries or poor outcomes. The final price would depend on factors like the facility size, location, client mix/acuity levels, loss control procedures, and claims history.
Estimated Pricing: $2.50-$4.00/bed
Workers’ Compensation Insurance
“Workers’ compensation insurance provides critical benefits and protections for both employers and employees in high-risk industries like residential mental health and substance abuse facilities. It covers on-the-job injuries and illnesses, pays medical bills and lost wages, and protects businesses from expensive liability lawsuits. The average premium rate for this industry is around $2.50 per $100 of payroll. Workers’ compensation ensures employees receive timely medical treatment and compensation if hurt at work, while shielding employers from liability lawsuits.”
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Based on industry research, the average workers’ compensation insurance premium rate for businesses in the Residential Mental Health and Substance Abuse Facilities industry (NAICS 6232) is around $2.50 per $100 of payroll. This rate is determined based on the industry risk factors and average claim frequencies and costs. The final premium amount would depend on individual business factors such as payroll amount, safety programs/rating credits, and past claims history.
Estimated Pricing: $2.50/$100 of payroll
Property Insurance
Property insurance is a critical component for businesses in the residential intellectual and developmental disability, mental health, and substance abuse facilities industry. It provides financial protection against unexpected property losses and liabilities. Key benefits of property insurance for these facilities include covering costs of repairing or rebuilding after damages, replacing lost income if facilities are unusable, covering liability if a resident or staff is injured on the property, and covering theft of property or equipment failures. Top use cases involve coverage for buildings, equipment, loss of income, residents’ personal property, liability claims, food spoilage, and replacement cost rebuilding. Estimated average annual premiums for a $5 million property value facility would be around $17,500 based on typical industry rates.
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Based on typical property insurance rates for the 6232 NAICS industry, the average estimated annual pricing would be around $3.50 per $100 of insured value. Rates are usually calculated based on factors like location, risk level, protection measures in place, claims history, etc. For a typical facility with $5 million in insured property value, the estimated annual premium would be $3.50 x $5,000,000 / $100 = $17,500.
Estimated Pricing: $17,500
Commercial Auto Insurance
Commercial auto insurance provides important liability and physical damage protection for businesses in the residential intellectual and developmental disability, mental health, and substance abuse facilities industry. It protects these businesses from costly lawsuits and vehicle repairs resulting from accidents during transportation of clients, patients, and employees. The coverage also helps ensure adequate protection for those being transported as part of care services.
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Based on industry analysis, the average commercial auto insurance pricing for businesses in the Residential Intellectual and Developmental Disability, Mental Health, and Substance Abuse Facilities industry with NAICS code 6232 is approximately $1200-1500 per year. This estimate takes into account factors such as the type of vehicles used, average miles driven, drivers’ histories, and average claims for this industry.
Estimated Pricing: $1200-1500
Cyber Liability Insurance
“Residential healthcare facilities that care for individuals with special needs often handle sensitive personal information and are therefore at high risk for data breaches and cyber attacks. Cyber liability insurance can help protect these organizations by covering costs associated with responding to and defending against incidents that compromise private resident data. These reference materials provide details on the top benefits, use cases, and estimated pricing for cyber liability insurance tailored for residential healthcare facilities in the NAICS code 6232 industry.”
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For residential healthcare facilities like intellectual and developmental disability, mental health, and substance abuse facilities with NAICS code 6232, the average cyber liability insurance pricing is $2,500 – $5,000 annually. This pricing is calculated based on factors like the number of beds, annual revenue, IT security practices/controls, and history of cyber incidents. Larger facilities with more beds, higher revenue, and robust security are likely to get quotes closer to $2,500 while smaller facilities with fewer resources are likely closer to $5,000.
Estimated Pricing: $2,500 – $5,000
Directors And Officers Liability Insurance
Directors and officers liability insurance (D&O insurance) provides important coverage for businesses operating in sensitive industries like residential facilities for mental health and substance abuse. This type of insurance helps protect directors, officers, and the organization from expensive lawsuits and covers the legal defense costs of directors and officers, even if the allegations against them are proven groundless. It can further help attract qualified directors and officers to join an organization through the protections it provides. D&O insurance is especially important for organizations in this industry, as they face risks of lawsuits related to the vulnerable populations they serve and must adhere to strict standards of care.
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On average, the estimated annual pricing for Directors And Officers liability insurance for businesses in the NAICS Code 6232 industry would be between $5,000 to $10,000 per year. This pricing is derived based on the typical risk factors and claim histories for this industry, which involves operating residential facilities for vulnerable populations. The pricing would also depend on factors like the size of the organization, number of beds, revenue, past claims/losses, and other specific underwriting details of the business.
Estimated Pricing: $5,000 – $10,000
Employment Practices Liability Insurance
Employment practices liability insurance (EPLI) provides essential protection to businesses in the residential intellectual and developmental disability, mental health, and substance abuse facilities industry (NAICS Code 6232) against costly employment-related lawsuits and legal claims. EPLI covers legal fees, damages, and compensations from common claims like wrongful termination, discrimination, harassment, retaliation, and wage violations. It also protects against liability from injuries to vulnerable clients and residents caused by employee negligence. The average annual premium for EPLI in this industry ranges from $3,500 to $5,000 depending on organization size and risk factors.
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Based on industry data, the average estimated pricing for Employment Practices Liability Insurance for businesses in the Residential Intellectual and Developmental Disability, Mental Health, and Substance Abuse Facilities industry (NAICS Code 6232) is around $3,500 – $5,000 annually. Pricing can vary depending on number of employees, annual payroll, benefits offered, types of claims experienced in the past, risk mitigation procedures in place, and underwriting assessment by the insurance carrier. Having clear policies and procedures to prevent discrimination, harassment, and lawsuits can help lower the pricing.
Estimated Pricing: $3,500 – $5,000 annually
Conclusion
Comprehensive business insurance tailored to the exposures of residential facilities is critical for sustainability and risk management. The policies discussed provide financial protection for injuries, errors and both expected and unexpected losses so these important organizations can focus fully on their mission of caring for those in need.