Insuring Social Services Agencies: Inside Their Exposures

The social services industry encompasses a broad range of industry classes, including counseling centers, adult day care, home health care, group homes for the developmentally disabled, and foster and adoption placement agencies, just to name a few.

As you can imagine, insuring these and other social services agencies can be challenging. RPS Branch Manager Robin Stolle shares some insurance industry trends impacting this highly-specialized niche market.

Professional Liability Insurance for Social Services

Serving vulnerable populations brings significant loss exposures. Because of that, professional liability insurance is a challenging market for social services. Less capacity, stricter underwriting guidelines, and fewer policy extensions are available today.

"For example, carriers are shying away from offering Prior Acts coverage for Professional Liability insurance," says Stolle. "Some markets no longer provide 20-year retro dates on claims-made policies, even for risks with a good loss history, while others limit terms."

In addition, carriers are limiting the amount of Abuse and Molestation coverage they provide under a Professional Liability policy. Some markets may not want to offer more than $500,000 or $1 million limits for this coverage, which can be challenging for accounts with state or county contracts requiring higher limits.

Carriers are also restricting the Excess Liability limits they provide over the underlying Professional Liability policy.

"Markets will write $1 million or $2 million in Excess coverage but may opt not to include Abuse and Molestation or offer a sublimit," explains Stolle.

Commercial Automobile Insurance, Property Insurance Also Challenging

Like many other industries, commercial auto insurance is also challenging in the social services space. Any organization that owns or leases vehicles and is transporting people is seeing higher rates. How to deal with it?

"The key is to run (motor vehicle records) on all drivers," says Stolle.

On the Property side, accounts with wildfire exposure face a tough insurance market.

"If you have a group home for developmentally disabled people or youth home and it's located in a wildfire-prone area, many markets don't want to provide the Property coverage," Stolle explains.

Addressing Social Service Insurance Challenges

When reviewing an insured's options, Stolle recommends reviewing its abuse and molestation best practices to prevent losses.

"Make sure insureds understand their exposures and how to minimize them. This includes performing background and employment checks before hiring and onboarding," says Stolle. "Also, staff members should not be left unaccompanied with a child or other vulnerable person."

Underwriters want verification that organizations are implementing and following the procedures they have in place. RPS, for instance, takes a proactive approach by asking for documentation, which helps get the coverage clients need.

RPS also requests MVRs for all drivers, and those with a poor driving record will not be covered under the Auto policy.

Do Your Homework

Stolle also recommends that insurance agents looking to add social services to their books of business take the time to understand all the activities and operations involved with a risk.

"A group home, for example, may provide counseling, transportation to various activities, and may even have a home healthcare exposure," she says. "Or, if a foster placement agency does 40 or 50 placements versus five, there is a different level of liability exposure and a significant difference in premium. Every activity and operation should be considered to provide a full picture of their exposures to underwrite and protect the risk properly."