What insurance does a senior living management company need?

Plaintiff counsel names every entity with any control over the operation, because corporate negligence theories reach staffing models, budgets and policies, and those are usually set by the manager rather than the owner. A manager that is not a named insured on the community program funds its own defense in a case it did not create.

The fix is straightforward and often skipped: named insured status, not additional insured status, on the general and professional liability program of every community managed. Additional insured status is narrower, is usually limited to vicarious liability arising from the named insured operations, and does not reliably cover the manager for its own conduct.

Errors and omissions for the management services: budgeting, financial reporting, regulatory compliance advice, census and marketing performance, and hiring. An owner who believes the manager mismanaged the asset sues the manager, and that is a professional services claim between two businesses rather than a resident care claim.

Employment practices, because in most structures the community staff are employed by the manager or by a staffing affiliate of it. That places the entire employment exposure of every managed community on one balance sheet.

Directors and officers for the manager own governance, and crime coverage, since the manager typically controls community bank accounts and resident trust funds.

Read the indemnity in both directions. A manager indemnifying the owner for everything that happens at the community has assumed the operating risk of an asset it does not own, which is not what the fee compensates for. The workable position is that the manager indemnifies for its own gross negligence and willful misconduct, and the owner indemnifies for community operations generally, with insurance funded from community operations.

Then confirm who pays for the insurance and whose loss history it attaches to. A manager whose portfolio programs are all in its own name carries the loss history of every community it has ever managed, including ones it no longer manages, which affects its ability to place the next one.

Management agreements end. On a claims-made program, the manager needs coverage for claims arising from care during the management period that are reported after it. That means either continuing named insured status under the community program after termination, which owners resist, or the manager carrying its own professional liability with prior acts covering the managed period.

Settle this at signing. A manager that loses a contract and then discovers it has no coverage for the four years it ran the building has a problem with no cheap solution.