What happens to our insurance when we acquire a senior living building?

Care delivered before closing will produce claims after closing. On a claims-made program, those claims are covered only by a policy whose retroactive date precedes the care, which means either the seller buys an extended reporting period or your program grants prior acts back to a date before the seller owned it.

Prior acts granted by your carrier is usually cheaper than a tail bought by the seller, but it puts the seller history inside your limit and your loss record, which affects your renewal for years. A tail keeps it separate and costs the seller real money, which is why sellers resist it.

Whichever way it goes, it belongs in the purchase agreement with the cost allocated, not raised for the first time in the week before closing when there is no leverage left.

An asset purchase is generally understood to leave liabilities behind. In licensed care that comfort is weaker than elsewhere, because states apply successor liability doctrines to health care operations, because the license and the provider agreement often transfer with continuing obligations, and because a plaintiff will name the current operator regardless and litigate the question.

The practical response is to insure and escrow as though successor liability may attach, rather than to rely on the structure. That means confirming your program will defend a claim naming you for pre-closing conduct even if the claim is ultimately not yours.

Five years of loss runs by claim, not summarized. Open claim detail with reserves. The full survey history including any immediate jeopardy findings and plans of correction. Every open regulatory matter. The current policy specimens, not certificates, so you can see the abuse sublimit, the defense treatment and the retroactive date.

And the incident log, because open incidents that have not yet become claims are the exposure diligence most often misses. A pressure injury under treatment at closing is an unfiled claim you just bought.

Add the building to the schedule effective at closing, with the correct entity as named insured, and confirm the property value and business income figures rather than accepting the seller numbers. Confirm the license transfer date and whether a change of ownership triggers a new licensure insurance filing.

Report every known incident to your carrier as a notice of circumstance immediately, because a circumstance noticed under the policy in force is covered even when the claim arrives years later, and one that was known but not noticed is a coverage argument.