When it comes to insuring your nursing location, one may feel they need to constantly upgrade and increase their coverage. However, in certain cases, upgrading your insurance may not be worth the additional cost.

In this article, we will explore why upgrading your nursing location insurance may not be the best choice for your facility.

Expensive Premiums

It is no secret that insurance premiums can be expensive, and this is especially true for nursing homes.

According to the National Conference of State Legislatures, liability premiums for assisted living facilities and nursing homes can be as high as $300,000 per year. Therefore, if you choose to upgrade or increase your nursing location insurance, you may be subject to additional expensive premiums that may not necessarily provide a better return on investment.

Premium Increases

When upgrading your insurance, it is important to note that once you have made the change, your premiums may increase drastically.

This is because insurance providers may see your facility as a higher risk and will charge a premium rate to account for this potential risk. Additionally, if you are making a claim, your insurance provider may also raise your premiums in the future, regardless of whether the claim was valid or not. Thus, upgrading your insurance may not be worth the additional increase in premiums.

Limitations

Many nursing location insurance policies have limitations on what they cover. For example, an insurance provider may only cover a certain amount of property damage, medical malpractice, or worker’s compensation claims.

Therefore, if you choose to upgrade your coverage, you may still be subject to these limitations, which can be a hindrance to your facility. Additionally, if you are upgrading your policy due to a suggested requirement, it is important to fully understand what is and is not covered by the new policy.

Burden on Budgets

If you are a smaller nursing location, upgrading your insurance policy may cause a greater burden on your budget.

While it may seem like a good idea to upgrade your policy as a preventative measure, doing so may not be feasible for smaller facilities with limited resources. Therefore, it is important to examine the benefits and drawbacks of upgrading your policy before making a final decision, and if upgrading is not a viable option, consider alternative methods of risk management.

Opportunity Costs

Finally, it is important to consider opportunity costs when upgrading your nursing location insurance. Specifically, opportunity costs refer to what the facility may lose if they allocate a greater portion of their budget towards insurance.

For example, purchasing new equipment, expanding facilities, or hiring additional staff may not be possible if a majority of the budget is going towards insurance premiums. Therefore, nursing locations must weigh the potential benefits of upgrading insurance against the opportunity cost of doing so.

Conclusion

It is important for nursing locations to carefully consider the benefits and drawbacks of upgrading their insurance policy.

While upgrading may seem like a proactive measure against potential risks, doing so may not be necessary or feasible for all facilities. When examining whether to upgrade coverage, it is important to consider premium costs, potential premium increases, limitations on coverage, burdens on budgets, and the opportunity costs of doing so.