With the price of liability insurance running at historic highs, many HME providers are looking for ways to obtain relief. Here are some suggestions that might help bring down your insurance costs:

1. Reevaluate your coverage. Make sure you are not paying for an risk exposure you do not have. Double-check all property values and review the information that the insurance carrier is basing your rates on, whether that is your revenue, payroll, or other exposure data.

During the last soft market, many HME providers bought too much insurance because prices were low and extra insurance in theory offered extra protection from liability claims.

“Ninety-nine percent of claims against HMEs are for amounts less than $500,000,” says insurance specialist Dennis Santoli, JD, CRM, chief executive officer of The Campaigna Group in Vienna, Va. “It is therefore not cost-effective for small HME providers—those making less than $1 million a year in sales—to carry multimillion-dollar policies. The odds of any given HME provider facing a claim of up to $1 million are probably less than one in a thousand.”

However, John Spragle, president of VGM Insurance in Waterloo, Iowa, disagrees. In his view, the odds may be on your side for avoiding that $1-million claim, but all it takes is one such claim to wipe out your business if you’re not covered for it.

“Let’s assume a court awards the claimant $1 million and your policy is only for half that amount,” he says. “In that situation, you will have to come up with the balance of the judgement out of your own pocket. Even if you go out of business or declare bankruptcy, you are still responsible for paying those damages.”

2. Ask each manufacturer of the products you stock for sale or rental to give you a broad-form vendor’s endorsement. Under stream-of-commerce legal theory, as long as you do not modify or relabel a product, the manufacturer is the one ultimately responsible when anything goes wrong with a product that you sold or rented. As such, the liability protection the manufacturer carries usually can be made to apply to you—at no cost—through the instrument of a broad-form vendor’s endorsement, Santoli says.

“Manufacturers almost always carry higher liability limits than you, the retailer, do,” he says. “So, if a big customer of yours requires you to carry, say, $3 million in liability insurance, but you do not want to buy more than the $500,000 policy you already have ... then a broad-form vendor’s endorsement might get you up to that $3-million level for each of the specific products that big customer buys from you.”

3. Manage your risks more tightly. One way to do that is by taking pains to hire the best people as your delivery drivers and setup technicians, says Bill Thompson, CIC, senior vice president and partner in Smith Bell & Thompson of Burlington, Vt. Over time you can also reduce your insurance costs by implementing a risk management program that will minimize the chances of losses, which can help keep your future insurance renewal costs down.

4. Make sure your coverage is HME-specific. A standard business insurance policy might be cheaper and more readily available, but usually these offer no protection against harm occurring off-premises—precisely where most HME-industry claims arise.

“An HME provider needs coverage known as ‘products and completed operations’ to protect him or her against injuries that occur in or around the home of the person buying or renting equipment,” Santoli says.

5. When shopping for a new policy, carefully examine the exclusions listed before agreeing to the terms. Look for caveats in the products and situations covered. Some of these exclusions can make your coverage all but useless in certain circumstances, Santoli says. For example, the policy may promise to protect you from claims dealing with injuries arising from a client’s misuse of a pulse oximeter, but only so long as that equipment is not used in conjunction with the administration of oxygen from a canister.

6. Avoid buying from poorly rated insurance companies. A good source of ratings information is A.M. Best Company, which assigns to every insurance company a grade from A to C. Top-rated firms—those with sufficient capitalization to cover the losses of their customers—are awarded a grade of A++.

“Anything below a grade of A and you are looking at companies on shaky ground,” says Spragle. “If you buy from a company that goes out of business, the money you paid in premiums is gone.”

7. Remember that bigger is not necessarily better. Looking only to major, name-brand companies for your liability insurance and not considering small companies that are long-time, stable specialists in health care liability could be a mistake. “There is no guarantee a major provider will be able to get you the best coverage and the best pricing,” Santoli says.

8. Join a group-purchasing organization. Some offer their members access to liability insurance coverage at discounts well below what any one individual shopper could command by acting on his or her own.