Lessons from the tragic Nursing Home fire
The tragic fire at the Sydney aged care facility/nursing home is a timely reminder of the specific insurance issues that should be considered when insuring this occupation. One such issue is Accommodation Bonds
Typically residents pay a bond on taking up residence at the aged care facility. This is refundable on their leaving the facility. Depending on the jurisdiction, legislation may dictate what can and cannot be done with the bond monies received. In some cases the money is either invested and earns interest for the owners of the facility or it is treated as working capital. Either way the funds may well be tied up and not easily converted back into cash when it is necessary, as often occurs after a major event such as a fire, severe storm, earthquake or the like and the premises or a sizeable portion of it is no longer habitable.
The tenants who are now displaced and their families are anxious to get their deposit back so that they can use it to fund alternative accommodation. The owners of the facility may have to seek borrowings to fund the repayments incurring extra financing costs. Other times they may need to break the term of a deposit with a finance institution again incurring additional costs of working.
There is also the issue of lost investment income where the bonds have been invested. LMI Group as part of the development of its RiskCoach and PolicyCoach products identified this problem after discussion with the Claims Services Division. As a result a specific endorsement Accommodation Bonds, Endorsement code BONDPCA4 was drafted.
For those that do not currently have access to either LMI RiskCoach or LMI PolicyCoach, I attach a PDF setting out the endorsement and Coach’s Comments below.
Another issue to keep in mind is who has the insurance in place for the residents’ own property. It is much better to address this before any loss than afterwards where stress levels are high and protecting the brand of the facility is of paramount importance.
These are but two of many things to take into consideration. Yet another is statutory fines and penalties which should considered as part of the Management Liability program.
More tips on this occupation and hundreds more are available from LMI RiskCoach. To learn more go to http://www.lmigroup.com/riskcoach/default.aspx
Disclaimer: This post has been prepared as a guide and is not intended to exhaustive. While
the utmost care has been taken in the preparation of the post, it should not be used or relied upon as a substitute for detailed advice or as a basis for making a business, financial or insurance decision.