Do You Need Insurance to Operate an RCFE in California?
One question that comes up frequently from both new and current RCFE administrators is whether insurance is optional or simply “recommended.” Some people assume insurance is just a business best practice. Others think it can wait until after licensing. In reality, insurance is not optional for an RCFE. It is a legal requirement.
California law requires every Residential Care Facility for the Elderly to carry liability insurance as a condition of licensure. This requirement is established in the Health and Safety Code, and it applies to all RCFEs, regardless of size or capacity.
Under the Health and Safety Code, an RCFE must maintain liability insurance coverage of at least one million dollars ($1,000,000) per occurrence and three million dollars ($3,000,000) aggregate. These numbers are not suggestions. They are minimums mandated by law, and operating without this coverage places a facility out of compliance.
This insurance requirement exists to protect residents, families, and the facility itself. RCFEs care for a vulnerable population, and the law recognizes that accidents, injuries, or unexpected incidents can happen even in well-run homes. Liability insurance ensures there is financial protection in place if something goes wrong.
It’s also important to understand that this insurance must be active and maintained, not just purchased once. If coverage lapses, is canceled, or drops below the required limits, the facility can face citations and enforcement action. Insurance compliance is part of ongoing operations, not just the initial licensing phase.
