CCRC and life plan
What insurance exposure do refundable entrance fees create?
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.
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More ccrc and life plan questions
Are volunteer trustees personally exposed?
Yes, on governance decisions about an obligation running decades forward. Many trustees were never told that is what serving involves.
Do our bond covenants dictate our insurance?
Frequently yes. Tax-exempt bond documents carry insurance covenants the same way a HUD loan or a REIT lease does, and the program drifts away from them annually.
How should the aggregate be structured on a single campus?
A per location endorsement does nothing on a campus, because the campus is one location. Size the aggregate against the whole campus claim frequency instead.
Does one policy cover all our levels of care?
It should, and the term that decides it is the professional services definition. A resident who transitions between levels should not transition out of coverage.
Do we need fiduciary liability separately from D&O?
Yes. Fiduciary covers ERISA duties for the benefit plans; D&O covers governance of the organization. Sharing a sublimit means one exhausts the other.
How do resident trust funds work at a CCRC?
The balances are larger than at a standalone facility, and the funds are held in a fiduciary capacity that a standard crime form does not necessarily reach.
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