Assisted-living residents may lose important insurance coverage

Mary Lou Jay

Elderly people who sell their homes and move to assisted living centers may not realize that they're losing an important insurance protection -- personal liability insurance.

Liability insurance protects policyholders from financial losses when someone on their property is hurt or has personal property damaged. Policies usually cover medical expenses and costs associated with lawsuits. Most have personal liability insurance through their renter's or home insurance policies, with coverage typically between $100,000 and $300,000, according to the Insurance Information Institute.

But that liability coverage disappears when someone moves into an assisted living center and no longer carries homeowner's or renter's insurance. Although the assisted-living center should have its own liability insurance, that policy usually covers only the facility itself and its common areas. It may not extend to individual residents' rooms and apartments or to residents personally.

This means that if a visitor falls and injures herself while in a resident's room or apartment, the resident could be forced to pay medical and other out-of pocket expenses (like the cost of mounting a defense against a lawsuit). Residents who accidentally injure someone (with a motorized scooter, for example) in a common area within a long-term care center also could be personally liable for medical bills and damages.

Another important protection typically offered under personal liability coverage is protection against liability for pet bites. Many assisted living centers allow and even encourage residents to keep small pets. But if those residents don't have liability insurance, they could be responsible for any medical expenses if a dog bites a visitor or a cat scratches an employee. That's not a small expense; according to the Insurance Information Institute, the average cost of a dog bite claim was $24,840 in 2009. That could pay for months of assisted living care.

At least two insurance companies have begun addressing the need for assisted living liability insurance. AGE Insurance offers the Asset Guard Endorsement (A.G.E.) policy, which provides liability coverage for incidents like pet bites, slip-and-fall accidents, libel, slander, fire and mobility scooter damage. The Hanover Insurance Group has taken a different approach. It offers to extend its home insurance coverage (at an extra cost) to assisted living residents if they're relatives of a Hanover policyholder.

Other insurers may decide to enter this market. According to the Administration on Aging, 15.4 percent of people age 85 and older were living in some kind of institutional setting (nursing home or assisted living center) in 2009. With the U.S. Census Bureau predicting a population of 9.6 million Americans age 85 or older by 2030, the need for personal liability coverage for assisted living residents may grow.

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