Defense Costs: Inside vs. Outside Policy Limits
The assisted living and personal care home insurance industry is one of the most litigious sectors of business out there. Unfortunately, no matter how safely you operate your facility, unforeseen events can occur that have potential to develop into lawsuits. For this reason, it is important to review your liability insurance policy and understand how it will respond in paying your defense costs.
In many cases, attorney fees can be the largest cost of a claim. If defense costs are inside the policy limits, these costs reduce the amount of the policy limit. For example: You have a $1,000,000 liability policy with defense costs inside the policy limits. There is a $900,000 claim with $300,000 in defense costs, totaling $1,200,000. Since your policy has a $1,000,000 maximum payout per claim, you as the owner are responsible for the additional $200,000.
Conversely, if defense costs are outside the policy limits, the policy will pay the amount of the claim plus additional defense costs. Using the same example as above, the client would not be responsible for any additional money owed since the claim was $900,000 and defense costs are outside of the $1,000,000 in coverage.
Most of the assisted living liability and personal care home insurance companies we work with provide defense costs outside of the policy limits, ensuring maximum protection for our clients. If your current policy does not offer this coverage, please give us a call. We pride ourselves on providing better coverage and rates that will save you money!
Jeff Schmidt – Senior Living Insurance Specialist
This article is for informational purposely only. There is no legal advice being suggested or proffered and the author assumes no responsibility or liability for the actions taken or not taken by the readers based upon such information.