Is Liability Insurance Required in All States?

• Acquiring liability insurance has become more difficult for nursing homes. The problem began with the costs going up for liability insurance.That is due, in part, to the high cost of litigation. Other factors are risk management problems and experience ratings. As important as liability Insurance is, it is not a general requirement for all nursing homes have it. Each U.S. state makes its own laws on nursing home liability insurance. Florida has the highest rate of nursing home liability lawsuits. Authorities in Florida have implemented reforms to stem the proliferation of nursing home lawsuits. The Florida law has imposed a statute of limitation of two years for nursing home liability cases,
  
  

What is Liability Insurance

• Liability insurance is special insurance coverage which protects the insured person or company from liability lawsuits. In this case, the nursing home liability coverage protects nursing homes from lawsuits originating from some aspects of their nursing home care. The liability insurance also offer protection to nursing home patients and their families. If someone is putting their parents into a nursing home, it is important for them to know that such institution has a liability coverage to protect their loved ones in case of a problem. In today's environment it is very difficult for families to find out what nursing homes have liability coverage and those that don't. Families would be relying on the words of the nursing home operators regarding their coverage status.
  
  

Substandard Liability Insurance Coverage

• Some nursing homes are purchasing substandard nursing home liability coverage which does not give full protection against liabilities. These kinds of liability insurance are generally referred to as "eroding or wasting" policies. For example assuming a nursing home purchases $600,000 of this kind of insurance liability, the way this policy works is that the total attorney fees would be deducted first if that nursing home was sued. So if the attorney fees total $400,000, the remaining balance of $200,000 is the actual amount of insurance liability protection they may obtain from such policy, which actually amounts to little in light of the average liability awards.
  
  

Limitations on Nursing Home Liability Awards

• Many states are limiting liability award settlements and putting caps on the maximum amount that can be awarded. If judgments exceed the maximum insurance coverage of a nursing home found liable, most states allow the injured person to go after the personal assets of the nursing home owner.
  
  

Nursing Homes and 'Single Purpose Entities'

• Some nursing homes are incorporating as single purpose liability companies with limited risks and liability to reduce the risks posed by skyrocketing litigation costs and lawsuits. Some of the nursing home operators forgo nursing home liability insurance altogether. Such strategies do not provide foolproof protection against a lawsuit.