Just like any organization, behavioral healthcare providers have assets they need to protect. When approaching risk management and liability coverage, common sense prevails. But it's also important to consult with your legal and insurance representatives to make sure one thing never changes: no matter what happens, you're covered.
According to Brad Storey, MSW, director of risk management for Irwin Siegel Agency Inc., the best way to do that is to enlist a proactive approach to risk management. Storey notes that facilities that are able to stay ahead of potential risks are "able to make better decisions, identify potential problems and implement controls up front."
While the primary task of insurance providers is to "mitigate the chances that an exposure to risk actually turns into a claim," they also must provide options when funding and resources are limited. When money is tight, Storey suggests that providers adopt a "total cost" view of their coverage. "When you're looking at an insurance program, it's not just a matter of comparing bottom line premiums," he says.
For example, providers may offer clients supplemental services like training and pre-employment screening, which will likely free up full-time staff and offer a valuable cost saving. However, such services could also generate liabilities, since the provider assumes responsibility for the quality and accuracy of the work.
This potential "needs to be understood as part of a total cost of risk calculation," Storey urges, "rather than focusing on coverage alone."
While managing risk relies heavily on common sense, there are also many factors of insurance coverage that have the potential to create problems if not properly understood. Ideally, the following suggestions will prompt valuable interaction with your insurance provider, ensuring that no repair, remodel or renovation in your facility introduces a level of risk that you didn't expect.
1. Update coverage for "green" renovations. Green design elements (recyclable, earth-friendly roofs, energy saving materials and equipment) are increasingly popular design options for behavioral health facilities, since they trade a higher upfront cost for long-term energy and operations savings.
But according to Rich Willetts, CPCU, ARM, program director at NSM Insurance Group, insurance policies often do not cover the added replacement cost of green items if they are damaged. They promise only to replace damaged equipment or materials with items of "like kind and quality."
That means that if green materials are used in renovations (and no policy changes are made), any damaged property likely will be replaced with only what is regarded as "standard." "If you're going to upgrade or renovate with anything non-traditional, like solar panels or a new roof made of environmentally friendly material, it's definitely something to consider," Willetts says.
2. Double-check limits after an upgrade. After an upgrade or renovation, ask if your policy's coverage limits are still adequate, Willetts advises. "If they're not, you could be subject to a coinsurance penalty." All insurance policies have a clause requiring policy holders to maintain insurance that matches the value of the property, Willetts explains. …