Why Your Assisted Living Home Shouldn't Depend on a Dwelling Fire Policy

Derek Kartchner | Gila Insurance

So, you’ve decided to open an assisted living home. Kudos to you for providing such a noble service!  However, let’s have a little chat about insurance—specifically, why a dwelling fire insurance policy is not your knight in shining armor. 

Picture this: you’re a hero, and you’ve mistakenly equipped yourself with a butter knife instead of a sword. Spoiler alert…the butter knife is your dwelling fire policy, and the dragon is the array of risks your assisted living home faces. Dwelling Fire policies are insurance-speak for a rental property insurance policy or a policy for a fix and flip. We have addressed why occupancy matters in other articles, but the same principle applies here. Insurance companies want to know what’s happening under that roof so that they can properly address the risk. 

The Business Exclusion Clause: Your Frenemy

First, let’s talk about the business exclusion clause. This sneaky little line in your dwelling fire policy essentially says, “I’m here to cover your home, not your business.” It’s like inviting your cat to guard your house while you’re on vacation. Sure, it’ll catch a mouse or two but don’t expect it to fend off burglars.

A dwelling fire policy is designed for personal residences, covering things like fire (obviously), windstorms, and maybe the occasional burst pipe. But running an assisted living home? That’s a whole different ball game. You’ve got medical equipment, staff, residents, and a plethora of other factors that scream “BUSINESS!” louder than a toddler with a toy megaphone. 

You might say, “…but I’m not operating the assisted living facility and we aren’t providing care. It doesn’t matter!”  Group homes, assisted living, sober living homes, etc. are considered businesses, and not addressing them properly can create serious issues in the event of a claim.

Covering your property for business use will cost you more, so be sure to get your quote first before signing the lease. On more than one occasion, I worked with an investor who rushed into the lease because of the higher rent that would be generated, not realizing the increased costs involved.

Why You Need a Real Policy

Imagine you’re hosting a bingo night, and one of your residents accidentally sets the living room on fire while trying to light a candle. You call your insurance company, and they respond with a polite, “Nope, not our problem.” Why? Because your dwelling fire policy isn’t designed to cover business operations. It’s like expecting your Wi-Fi to keep working during a zombie apocalypse—it’s just not built for that. 

To paraphrase a common term these days, “Mess around and find out!”  Insurance companies are losing money at this time, and they are looking for reasons to not pay claims.  Don’t give them one!

In an assisted living home, you’re not just managing a building; you’re managing lives. This means you need coverage for liability, workers’ compensation, professional liability, and business property insurance. Using a dwelling fire policy for your business is like using a sieve to carry water—utterly ineffective.

The Bottom Line

While a dwelling fire policy might be great for many investor risks, it’s a terrible choice for an assisted living home. Don’t be the person who brings a butter knife to a dragon fight!  Get the right insurance, get a quote early (business quotes can take a while to obtain), and sleep easy knowing your assisted living home is properly protected. 

Remember, sometimes you need more than just a cat to guard the castle.