CCRC and Life Plan Insurance FAQ

They make your residents creditors as well as residents, and creditors sue about money. If the community financial position deteriorates, the claims that follow are about reserve management, whether refund obligations were adequately funded, whether disclosures were accurate, and whether the board discharged its duties.

Those are governance claims. The general and professional liability program does not answer them. They land on directors and officers coverage, which at many communities was sized against the operating budget rather than against the obligation.

Size the D&O limit against the entrance fee obligation and the outstanding debt, because that is the scale of what a deterioration claim reaches. Then confirm the entity itself is covered rather than only individuals, that an innocent insured carve-back protects uninvolved directors, and that the bodily injury exclusion is not drafted so broadly that it pulls a governance claim out of coverage merely because a resident was injured somewhere in the story.

Yes. Many life plan communities are nonprofit and governed by volunteer trustees drawn from the local community, and those individuals carry personal exposure for decisions about reserves, refund funding, disclosure and financial oversight.

The obligation they are governing runs decades into the future, which means decisions made in one board term are judged against outcomes in another. That is precisely the pattern that produces claims against people who thought they were doing community service.

Two protections matter. Directors and officers coverage sized against the obligation, with entity coverage and an innocent insured carve-back. And an indemnification provision in the bylaws that actually works, because D&O coverage is frequently structured around the assumption that the entity indemnifies first.

Frequently yes. Many CCRCs are financed with tax-exempt bonds, and the bond documents carry insurance covenants specifying coverages, limits and sometimes carrier rating requirements.

Those covenants were negotiated once, at issuance. Your insurance program renews every year, in a market that changes, handled by people who were not in the room. Drift is the normal outcome, and it surfaces during a refinancing, a rating review or a trustee audit rather than at a claim.

On top of that sit state continuing care regulations, which in many states impose reserve, disclosure and financial reporting requirements administered by an agency separate from the health licensing agency. A CCRC can therefore be answering to a health regulator, a continuing care regulator and a bond trustee at once. Build one reconciliation schedule covering all of them and refresh it at every renewal.

Carefully, because the standard answer does not apply. A designated location general aggregate endorsement is the usual fix for a multi-site operator, and on a single campus it does nothing, because the campus is one location.

That matters because a campus with independent living, assisted living, memory care and skilled nursing concentrates four claim profiles at one address, drawing on one annual aggregate. The frequency that aggregate has to absorb is the sum of all four levels of care, not the frequency of the largest one.

Size it against total campus claim frequency over five years rather than against a market default. This is the setting where a thin aggregate is most likely to be tested, and the operator least likely to have modeled it.

It should, and whether it does turns on the professional services definition rather than on the schedule of locations.

Confirm the definition spans the whole continuum rather than being drawn around one licensure category. Residents move between levels as their needs change, and the claim most likely to fall in a seam is the one arising from the transition itself: whether the decline was recognized, whether the move was timely, whether the receiving level was appropriate.

Also confirm the named insured schedule covers every operating entity on the campus. CCRC structures frequently separate the entity holding the continuing care contracts from the entity operating the skilled nursing beds, and a plaintiff will name both.

Yes, and it should be a separate policy rather than a shared sublimit inside D&O. They cover different duties: fiduciary liability addresses ERISA responsibilities for employee benefit plans, while D&O addresses governance of the organization.

A CCRC is a labor-intensive employer running retirement and health plans, which puts the usual fiduciary exposures in play: plan fee reasonableness, investment selection, and the administrative errors that come with onboarding and offboarding a large workforce. ERISA imposes personal liability on the individuals serving as plan fiduciaries, and those individuals are frequently your own executives sitting on a plan committee without having been told that is what they became.

Confirm separately that the ERISA fidelity bond requirement is satisfied. The bond protects plan assets against dishonesty and the liability policy covers breach of duty; they do different jobs and one does not substitute for the other.

The same way they do elsewhere, but the balances are larger. Facilities routinely hold personal funds on behalf of residents, and for facilities participating in Medicare and Medicaid the management, accounting and assurance of those funds is governed by federal requirements.

The coverage trap is that a standard crime policy insures loss of the organization own money and property. Resident personal funds are held in a fiduciary capacity, and some forms do not reach them without a specific extension. Confirm the extension is actually endorsed rather than described in a proposal, and confirm the limit is sized against the aggregate balance the account actually carries rather than a figure chosen years ago.

Then reconcile the account regularly, independently of whoever has custody. That reconciliation is what a surveyor asks for and what makes an insurance claim provable, since a facility that cannot show what the balance should have been struggles to establish the amount of its loss.