Insurance Guide for Home Health Agencies: Liability and Workers Compensation

Running a home health agency is all about helping people live their best lives in the comfort of their own homes. This is something everyone can relate to—whether thinking about their own future or that of a loved one, such as a parent or sibling. However, as many providers know, families rarely plan ahead for their home healthcare needs. More often than not, they seek help only when a caregiver has reached their limit. That’s where your agency comes in.

When providing care to fragile individuals in sensitive environments, having the right insurance coverage is critical. Many risks exist in this field, and this guide will help you understand the essential insurance policies you need to protect your agency.

An Owner of a Home Health Agency at her desk

1. General Liability Insurance

General Liability Insurance is the foundation of your coverage. It protects against lawsuits related to bodily injury and property damage.

Example: If you are mopping the floor and a family member slips and falls, this insurance would cover the claim. Slip-and-fall incidents are among the most common general liability claims.

2. Professional Liability Insurance (Malpractice Insurance)

General Liability Insurance does not cover professional mistakes. Professional Liability Insurance steps in when your agency is accused of negligence or failing to provide the agreed-upon level of care.

Examples:

• You were scheduled from 1-5 PM, but no one was at the house, and the patient was injured.

• A caregiver failed to administer medications in the correct order.

• A known food allergy was ignored, leading to a medical emergency.

  
  

Mistakes happen, even in healthcare. Professional Liability Insurance helps protect your agency in these situations.

3. Abuse and Molestation Liability Insurance

This coverage protects your agency against lawsuits related to accusations of physical or sexual abuse.

Since most home health services occur one-on-one in a private home, supervision is limited. This increases risks for both the patient and the caregiver. Abuse and Molestation Insurance helps mitigate these risks.

4. Workers' Compensation Insurance

Workers' Compensation covers medical bills and lost wages for employees injured on the job.

Many home health agencies employ independent contractors who often work for multiple agencies. If you work with independent contractors, verify that they have their own liability and workers' compensation insurance. If they do not, assume you’ll need to account for their payroll in your workers' compensation policy.

Learn more about independent contractor risks.

5. Commercial Auto Insurance

If your agency owns vehicles used for business, Commercial Auto Insurance is essential. It covers accidents involving business-owned vehicles during work-related travel.

6. Hired and Non-Owned Auto Insurance (HNOA)

Even if your employees use their personal vehicles for work, your agency could still be held liable in an accident. HNOA provides coverage beyond the employee’s personal auto policy.

Tip: Verify that all caregivers driving for your business carry at least $100,000 in bodily injury liability per person and $300,000 per accident.

7. Cyber Liability Insurance

Home health agencies handle sensitive client data, including medical records. Cyber Liability Insurance protects your agency in the event of a data breach, ransomware attack, or other cyber threats.

Some agencies have been completely shut down due to ransomware attacks on third-party software providers. Ensure your cyber policy includes coverage for disruptions caused by third-party vendors.

8. Employment Practices Liability Insurance (EPLI)

EPLI covers workplace-related lawsuits such as wrongful termination, harassment, and discrimination.

Bonus: Third-Party Acts Liability within this policy can protect your agency if a client accuses you of discrimination.

Example: A client claims your agency refused service based on their race, gender, or sexual orientation. EPLI provides defense coverage.

9. Fidelity/Employee Dishonesty Bond

Unfortunately, theft can occur. If a caregiver is accused of stealing from a client, this policy helps cover financial losses.

Specific Coverage: Look for “Theft of Clients’ Property” in your policy.

10. Property Insurance

Even if your services take place in clients’ homes, your office space and equipment still need protection. Property Insurance covers your office building (if owned) and its contents, such as computers and medical supplies.

11. Business Interruption Insurance

Fires, hurricanes, and other disasters can temporarily halt operations. Business Interruption Insurance helps cover lost income and ongoing expenses during such disruptions.

12. Umbrella Insurance

For severe incidents, standard policy limits may not be enough. Umbrella Insurance provides additional coverage when a claim exceeds your primary policy limits.

Industry Trend: In 2024, an estimated 50% of nuclear verdicts in the U.S. stemmed from abuse, neglect, or vehicle-related claims. These are key risks for home health agencies, making Umbrella Insurance a crucial safeguard.

Why Do You Need All These Policies?

Different types of lawsuits require different types of coverage. Home health agencies face unique risks, from providing medical care to managing a mobile workforce. Your insurance program should be tailored to your specific operations.

Final Thoughts

Insurance may not be the most exciting part of running a home health agency, but it’s one of the most important. The right coverage ensures that your agency is protected against unexpected risks.

Take the time to review your policies, consult an insurance expert, and ensure you have comprehensive coverage. Your future self—and your business—will thank you!