Protect your senior care home staff
If you have a senior role in a care home or another care service provider, there are considerable risks of being personally sued. This is due to an increasing legal and regulatory focus on personal accountability across all sectors.
Even if your business has limited liability, it does not protect you as an individual. If someone feels they have suffered as a result of any shortfall in your duties as a director and /or officer during your employment, you may be at risk.
Mishaps in care homes have been brought into the spotlight by the media over recent years, with some high profile cases.
Reasons for claims include:
- Regulatory investigation
- Mismanagement or negligence
- Unfair dismissal or discrimination
- Libel or slander
- Breach of duty
- Anti-competitive behaviour
Legal action could result in you losing your personal assets. Regardless of the size of your business, the potential liability can be severe.
It’s advisable for you as a business to have the proper risk management in place, including directors and officers liability insurance (D and O), not only for your benefit but for the peace of mind of your employees. Having cover can also mean that you attract the best staff to your care home.
You may wish to consider reviewing the following areas to ensure you’re doing what you can to manage your directors and officers risks:
Review your corporate structure, making sure to focus on:
- Employee training, education and inductions
Take stock of your current training and education programs and assess whether they’re fit for purpose. Do they need improving?
Review incidents or accidents that have happened due to lack of training, and engage with your employees to find out what training they’ve received.
Finally, make your managers aware of the legislation and regulations they must follow to ensure you’re compliant.
- Company policies
Legal procedures should be within each policy so that employees know your guidelines, and what’s expected of them, and your ethical standards.
Consider potential liabilities and the amount of risk each poses. Directors and officers often have to rely on information from employees to form decisions, so it’s important to have reliable managers.
Indemnification clauses allow your business to compensate a director or officer for losses while defending against a D and O lawsuit. Whilst you’re reviewing corporate structure, take a look at your clauses, they may also need revising.
If your senior care home staff incur expenses in a lawsuit, they can receive compensation through:
- 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.
Which type of indemnification is best for your business depends on the senior employees you want to attract and how you view risk.
Directors and officers liability insurance
Care homes tend to choose D and O insurance to protect senior staff from legal expenses and personal liability not covered by indemnification. Public liability and products’ liability polices do not cover the cost of D and O legal actions. In the worst case without D and O insurance cover in place, you could end up bankrupt.
Make sure that you review the D and O policy that you have in place and the policy terms. Also ensure that you have enough cover in place and take note of any exclusions in the policy and what’s not covered.
Find out more about our care home insurance.
Zywave: Managing risks for directors and officers
- key person protection