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3 Insurance Mistakes That Could Bankrupt Your Care Home
A Practical Guide to Protecting Your Business with the Right Coverage
1. Liability – Not Understanding Sublimits and Endorsements
What is a Sublimit?
A sublimit is LESS coverage available to cover a specific type of loss. It's part of your overall policy limit but sets a maximum amount the insurer will pay for particular types of claims.
💡 Example: Your general liability policy has a $1Million overall limit, but only $100K for Physical and Sexual Abuse Claims. While total coverage is $1Million, Abuse Claims max out at $100K.
Common Sublimits in Care Home Liability policies:
Physical and Sexual Abuse Claims
Elopement Claims
Bedsore Claims
Fall Hazard Claims
Bathroom Hazard Claims
Choking Claims
Self-Inflicted Injury Claims
⚠️These specific loss types are typically the most common claims you'll face as a Care Home Owner.
What is an Endorsement?
An Endorsement is a document attached to your policy that amends its terms and conditions. It can add, remove, or modify coverage for specific risks, essentially tailoring your policy to your needs
💡Key Point: Many policies contain restrictive Sublimits, while Endorsements may increase those Sublimits. An Abuse Claim Sublimit of $100K may be increased up to $1M per claim if the policy contains an available Endorsement
Ask your Agent: "Please outline and clearly explain all Sublimits in the policy I'm being offered."
Ask your Agent: "Please outline all available Endorsements."
Take Advantage of the Endorsements that improve coverage and remove restrictions.
KNOW ALL of the Sublimits in your policy
KNOW the Endorsements can be implemented to improve coverage in your policy
NOTE - as many Endorsements are designed to improve or enhance the coverage in your policy, expect to pay an additional fee in order to add Endorsements to your policy.
Still confused or have questions?
📞 Call/Text Christian: 310-730-9795
📧 Email: christian@kyberbrokers.com
2. Property Insurance – Buying the WRONG TYPE of Policy
A critical mistake many Care Home Owners make:
A traditional Homeowners or Landlord policy is NOT meant for Care Homes.
A Care Home is a commercial business that happens to be located in a residential home. You need Commercial Property Insurance to be properly protected.
⚠️Major Insurance Companies Won't Cover You
State Farm, Allstate, Farmers, and virtually all major insurance companies will NOT insure a care home under a residential policy.
If you own the Home: Disclose immediately to your insurance agent that you're operating a business. They will almost certainly advise you need a new commercial property policy.
If you rent the Home: Discuss this with your landlord. Both of you stand to lose if there's a major claim and you have the wrong insurance.
🔥 Having the wrong property insurance could literally put you out of business with a single event.
Call your insurance agent/broker and make sure they are clear that you are operating a Care Home Business at the location listed on the insurance policy. Most likely they will inform you that your policy will NOT cover a Home being used for commercial purposes.
Renting? Call your landlord. Inform the landlord of your concern that the property policy might be the wrong type of policy and that BOTH of you may suffer a major loss if you have the wrong policy.
If you rent the home: Please discuss this with your landlord. Both of you stand to lose if there's a major claim and you have the wrong insurance.
for a Helpful Resource to Share with your Landlord
Still confused or have questions?
📞 Call/Text Christian: 310-730-9795
📧 Email: christian@kyberbrokers.com
3. Workers Compensation – Do You Actually Need It?
Many care home operators pay workers as 1099 contractors or in cash, thinking this avoids insurance requirements.
It doesn't.
💡 California Law is Clear: All care home workers must be covered by Workers Compensation Insurance. Period.
⚠️The Real-World Scenario
An employee has a minor injury and takes the rest of the day off to see a doctor. Seems fine, right? Wrong.
That employee talks to family, friends, or worse—a lawyer—and realizes they could get a substantial cash payout from your business by filing a workers comp claim. Suddenly, they see $10K-$25K (or even $100K+) as reasonable compensation.
Next thing you know, you receive a demand letter from their attorney requiring you to file a workers comp claim.
📬 Without proper workers comp insurance, YOU pay for everything: attorney fees (your own money), settlement negotiations, and the settlement itself (your own money).
If you have NO workers comp coverage...
Get a policy immediately.
If you DO have coverage...
Make sure it covers all your employees with adequate limits.
Under California law, you must carry
workers compensation insurance for all
employees—1099s and cash workers
included. Not having it puts your business
and personal finances at serious risk.
Don't Leave Your Care Home Unprotected
These three mistakes are common—but preventable. The right insurance
coverage protects your business, your assets, and your reputation.
If you're unsure whether you have the right coverage, now is the time to review
your policies with an expert.
Ready to get it right?
Contact Christian at Kyber Brokers
for a free review of your coverage.
Kyber Brokers
📞 310-730-9795
📧 christian@kyberbrokers.com
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