The liability risk facing care home directors and managers
The sad truth is that those same decisions could leave senior care home staff at risk from legal claims against them personally. That is because there is an increased legal and regulatory focus on personal accountability across all sectors – so, even if your care home has its own liability insurance in place, that cover may not protect you as an individual.
As a result, if someone feels they have suffered due to any shortfall in your duties as a director or senior manager during your employment, you may be at risk.
The reasons for a claim against you might include:
- regulatory investigation
- mismanagement or negligence
- unfair dismissal or discrimination
- libel or slander
- breach of duty
- anti-competitive behaviour.
The impact of liability claims on care home directors and managers
Liability claims made against you as a care home director or officer could end in legal action and, if a court upholds the claim, compensation awarded against you – putting your personal finances and assets at risk.
Regardless of the size of your business, the potential liability can be severe.
How to protect your senior care home staff from liability claims
Guarding against these potential liabilities is very important, and there are a number of steps you can take to do just that.
Directors and officers liability insurance for care home staff
First of all, it is crucial to have proper risk management in place – including directors and officers liability insurance (D&O), which steps in to help defend liability claims against an individual director of officer, covering costs and compensation.
D&O insurance can offer care home directors and officers vital protection, especially when it is in place alongside other measures to manage risks.
Review your care home corporate structure
Take a close look at your care home’s corporate structure and governance, being sure to focus on:
- Employee training, education, and inductions
- Current training and education programmes – assess whether they’re fit for purpose or need improvement
- Incidents or accidents that have happened due to lack of training – engage with your employees to find out what training they’ve received
- Ensuring managers are aware of the legislation and regulations they must follow to ensure you’re compliant
- Checking care home policies and procedures are up-to-date, documented and communicated to employees – all staff should know what’s expected of them and understand your ethical standards.
Identify potential care home liabilities
Consider potential liabilities and the level of risk posed by each. Directors and officers often rely on information from employees as the basis for important decisions and, more recently, have played key roles in interpreting and acting on detailed government guidance around COVID-19 infection control.
Ensuring you have reviewed possible issues and gathered accurate information from staff members is very important to managing risk, and to defending claims if the worst should happen.
Care home indemnification provisions
In simple terms, an indemnity clause allows your care home to compensate a director or officer for losses while defending a liability claim. So, while you’re reviewing corporate structure, take a look at your indemnity clauses ‒ they may also need revising.
If your senior care home staff incur expenses in a lawsuit, they can receive compensation in one of two ways:
- Mandatory indemnification: businesses must reimburse directors or officers for expenses as long as the legal action is defended successfully.
- Discretionary indemnification: there is no obligation to reimburse staff and it is decided case-by-case.
There are exceptions to indemnification provisions. For example, if legal action is brought by a shareholder, the director or officer cannot be compensated because the company would be paying itself.
Directors and officers liability insurance for senior care home staff
Care homes tend to choose D&O insurance to protect senior staff from legal expenses and personal liability not covered by indemnification – because public liability and products liability insurance policies do not cover the cost of D&O legal action.
Remember, in the worst-case scenario, if you are forced to defend a personal liability claim without the protection of D&O insurance, you could face serious financial losses or even bankruptcy – so take the time to review your D&O policy and policy terms. In particular, ensure you have enough cover in place and take note of any exclusions in the policy.
For more information, read about our care home insurance, which includes management liability (or D&O insurance) as standard.