Home care agency insurance costs and the cover behind them

What to take away

This article covers business insurance and operations. It is not legal, tax or insurance advice, and coverage terms vary by state and carrier. Confirm your own obligations with your state insurance department, a licensed broker and a CPA.

The cover types a home care agency carries

General liability pays for third-party bodily injury and property damage on premises you control or work in. A client's visitor trips over a supply bag, or a caregiver's equipment damages a floor. It does not pay for the care itself.

A common limit is $1 million per occurrence and $3 million aggregate. Premiums for a small agency typically run $500 to $2,500 a year. The Hartford and Markel both write property and liability policies for home care agencies.

Professional liability, written as errors and omissions or as medical professional liability, responds when a client alleges injury from negligent care, supervision or documentation. Most referral sources and payer contracts require it before they send you a name.

Typical limits are $1 million per claim and $3 million aggregate. Annual premiums for a small agency typically run $1,000 to $5,000. Per-caregiver policies run about $300 to $1,500 each. CNA and Philadelphia Insurance Companies publicly market professional liability to home health and human services agencies.

Workers' compensation covers caregiver injuries on the job, from back strain during a transfer to a needle stick. State law sets whether you must carry it and how the payroll is classified. Rates are quoted per $100 of payroll, so the premium moves with every hour you schedule.

The class code for home health care services is often 8829. Typical rates run $2 to $8 per $100 of payroll, but skilled nursing and two-person transfers can push the rate higher.

Class codes and rate ranges vary by state and carrier, so confirm the code and rate your state assigns. Travelers and The Hartford both write workers' compensation for home care agencies in many states.

Commercial auto matters if caregivers drive clients or run errands in a company vehicle. If they use their own cars, confirm whether your policy or theirs responds, and check the personal policy does not exclude business use.

A commercial auto policy for a home care agency typically runs $1,500 to $4,000 per vehicle per year. State, driver records and travel radius drive that range.

Umbrella liability sits above the other policies and pays after their limits are exhausted. It is the cheapest way to raise total limits, and it is usually the last line an owner adds. A $1 million umbrella typically costs $500 to $1,500 a year. A $5 million limit commonly runs $2,000 to $5,000 a year.

What drives the premium

Carriers price on annual caregiver payroll, the number of client visits, the services you offer and your claims history. Skilled nursing, dementia care and transfers carry more exposure than companion visits.

Two agencies with identical revenue can pay very different premiums. One runs 4,000 companion visits with low-acuity clients; the other runs 1,500 visits with wound care and two-person transfers. Ask your broker which classification your services fall into.

Your own figures decide the arithmetic. If annual caregiver payroll is P and the workers' compensation rate is R dollars per $100 of payroll, the annual premium is (P / 100) x R. Substitute your payroll and the rate on your quote, then compare carriers on that number rather than on a monthly installment.

At $1.5 million payroll and a $4 rate, the workers' compensation premium is $60,000 a year, which is why the rate per $100 matters more than the monthly bill.

What to bring to a broker

Bring these items to the first meeting, not after the quote:

Once policies are in force, keep a certificate log. Record the policy number, carrier, effective date and expiration date for each certificate you issue or receive. Diary the renewal 60 days out so a certificate does not lapse while a referral source is checking it.

Where the cost lines behave differently

Payroll rules that change your exposure

Two federal fact sheets are worth reading before you set rates. The U.S. Department of Labor fact sheet on hours worked in domestic service explains when on-duty, waiting and travel time between clients must be paid. Paid time is insured payroll, so it lands in your workers' compensation premium.

The U.S. Department of Labor direct care workers page collects the minimum wage and overtime resources that apply to home health aides, personal care aides and companions. Overtime hours are the ones that move a premium mid-year.

Accessibility obligations run alongside insurance. The Department of Justice ADA guide for small businesses sets out barrier removal, accessible routes and service practices for existing facilities, and it applies to the offices and service methods a client encounters.

Common questions

Does general liability cover a caregiver's mistake?

No. General liability responds to bodily injury and property damage, not to allegations that care was negligent. Professional liability or errors and omissions is the policy that answers a care-quality claim, and most payer contracts require it. A small agency typically pays $1,000 to $5,000 a year for that cover.

Why is workers' compensation usually the biggest premium?

Because it follows payroll rather than client count. Every scheduled hour, including overtime and paid travel between clients, is insured payroll. A rate quoted per $100 of payroll multiplies against that total. Ask your broker for the rate per $100 that applies to your class code, then apply it to your own payroll.

Can I just add an umbrella policy instead of raising limits?

An umbrella pays only after the underlying policies are exhausted, so it does not replace them. It is a cost-effective way to raise total limits once your general and professional liability limits are set where your contracts require. A $1 million umbrella typically costs $500 to $1,500 a year.

What changes my premium at renewal?

Payroll, visit volume, service mix, vehicle count and claims history. Adding a higher-acuity service line or putting caregivers on the road in personal cars moves the number more than a rate change from the carrier does. Ask for a new rate per $100 of payroll and a new visit count before you sign.