Do I Need Insurance for My RCFE?
If you operate a Residential Care Facility for the Elderly (RCFE), you may be wondering: “Do I really need liability insurance?” The short answer is yes, it’s required by law. Since July 1, 2015, all RCFEs (except those that are part of a continuing care retirement community) must carry liability insurance under Health and Safety Code §1569.605. The law requires at least $1 million per occurrence and $3 million total annual coverage for injuries to residents or guests caused by the negligence or omission of the licensee or employees. Without it, you could face citations, license revocation, or even closure.
Why is this so important? Liability insurance protects both your residents and your business. If a caregiver or staff member accidentally harms a resident through negligence, or even fails to act when needed, you, as the licensee, are held legally responsible. This is called vicarious liability, meaning the employer is liable for the acts of employees. Without insurance, your personal and business assets are fully exposed, especially if you operate as a sole proprietor. In one real case, a facility owner without insurance was sued for negligence and ended up with a $1.3 million judgment, losing both the business and personal assets.
While liability insurance adds another cost, it’s far less expensive than losing everything in a lawsuit. Many insurers now specialize in RCFE coverage, but options have decreased and prices have risen in recent years. For this reason, it’s smart to apply early, as approval can take several weeks.
