If you find the subject of liability insurance confusing, you are not alone. Providers face a myriad of questions when it comes to choosing the most appropriate insurance companies—and policies—for their businesses. What should you look for in an insurance company? What kind of coverage do you need most? And how much insurance do you really need?

First of all, look for a company that wants to get to know you. Mark A. Chmielinski, RRT, vice president of clinical services for Home Care of Michigan in Detroit, says one of the most important things to look for in a liability insurance company is if they are willing to take the time to understand you and your business. “There are a lot of companies out there that will insure you when they have no idea what they’re insuring,” he says. “We want to make sure that we personally meet whoever is insuring us. We want them to understand what our business is like, see our operations, and review our services.” He says a bad sign is when an insurance company does not bother to ask to see copies of your credentials, just assuming you have credentialed people.

A good company is interested in seeing the risk management program you have in place. “If they don’t even ask about that,” Chmielinski says, “they have no business insuring you.”

Know what your policy should include. Many HME providers purchase general liability policies assuming this will cover all aspects of their business. But general liability does not cover two important risks: professional errors or omissions and off-premise injuries. Make sure your policy includes a rider or wording to cover professional errors, such as problems incurred when a respiratory therapist delivers oxygen. Also confirm that your policy has “products and completed operations coverage,” which means that any accidents or injuries that occur away from your place of business—such as problems with a wheelchair after it is delivered to a house—are also covered. Larger, all-purpose insurance companies might be less likely to understand these issues, so make certain they are part of your policy. Chmielinski says Home Care has a group package that covers professional and product liability, but that they also mandate that their professional staff carry their own individual professional liability just to be safe.

Know Your Biggest Risks
For Chmielinski, vehicles are most difficult to cover. “Vehicles are being used so frequently, and they are increasing your risk of injury and traffic violations—which in turn increase your premiums,” he says.

In general, it is true that the most high-tech and complex equipment carries the biggest risks—including not just vehicles, but also lifts, elevators, and stair glides. But this is less often because of installation error or malfunction, and more likely due to misuse by the client—something that is hard for HME providers to control.

One thing you can do to lower your risk in these cases is to keep highly accurate records, detailing what work was done on specifically what part of the equipment and when. This way, if something goes wrong on a piece of equipment, you have the documentation showing it was not something your company worked on, and you will not be held responsible.

Enough is Enough
Know how much insurance is enough. One major misconception about insurance coverage is the belief that the insurance is not worth all the money it can cost. “Is it worth getting appropriate coverage?” he says people ask. “If you look at your annual revenues and compare that to what it costs you from a liability standpoint, it is worth every penny.” He knows that in this industry, providers have to count every nickel and dime, but that it is a small price to pay when “all it takes is one liability claim” to wipe you out.

Conversely, providers can overinsure. It does not make sense for a small HME dealer to have millions of dollars worth of liability insurance—they should get just get enough to protect assets. For most small dealers, that means between $250,000 and $1 million. Also beware of manufacturers that try to gain coverage under your insurance. This can happen when these kinds of companies are denied and see a dealer as the only way they can get insurance. But liability insurance companies are not able to control how equipment is manufactured and therefore cannot cover it. They see this kind of tactic as a big “don’t” in applying for insurance.

Another misconception among HME providers is that liability insurance works like no-fault personal medical or automobile insurance coverage. General and professional liability insurance is not “no-fault,” and if someone gets injured and it is not your fault, these types of insurance companies will not cover these injuries. Also keep in mind that these firms are in the business to make, not pay, money, so the more claims you file, the more likely rates may be raised or cancelled.

Concurrently, your rates are not just affected by your actions, but by the industry as a whole. Even if you have not filed claims and are considered a “good” risk, your rates could increase. As for applying for insurance, it is rare for an HME dealer to be denied coverage. However, if a company learns that you lied on your application, or if you have a claim or claims due to problems you knowingly did not correct, there is a good chance your coverage will be denied or not be renewed.

Chmielinski says you are unlikely to run into problems with your insurance, as long as you keep some basics in mind. First, make sure the insurance company understands your business and has an appropriate policy. Ensure that every patient encounter is accurately documented And finally, comply with national supplier clearinghouse standards, as well as recommendations and regulations.

Sarah Schmelling is a contributing writer for Dealer/Provider.