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Why Sober Living Homes Should Reconsider Professional Liability Insurance

Why Sober Living Homes Should Reconsider Professional Liability Insurance

By Krista Mayes, ATP Program Director

In the wake of a growing substance abuse epidemic, the need for sober living homes and recovery residences has surged. This is a segment of the treatment and recovery industry that has become more organized and “official” with standardized business models and operating procedures.  As a sober living home operator, it’s also imperative to ensure your program is appropriately insured.

For starters, the obvious property, general liability and sexual/physical abuse coverages apply. What’s less obvious is that professional liability coverage should be a serious consideration, even though you don’t provide any medical or psychiatric services. Why? The potential for accidental overdose or suicide are unfortunate outcomes for some who are just beginning their recovery. If a family brings a wrongful death suit against you, a general liability policy typically won’t respond to this type of loss.

Most general liability policies include a professional liability exclusion — meaning the policy won’t respond with even a defense for you if the claim or lawsuit alleges any type of professional negligence on your part. Savvy plaintiff’s attorneys can shape a case into a professional liability circumstance citing you were providing the professional service of delivering a safe, sober environment for the decedent to live in and were ultimately responsible for their safety. While this tact is a stretch, it is a real possibility.

A Cautionary Claim Story

Think about this example: ABC Sober Living provides a recovery residence for individuals starting their recovery. The home has a live-in resident manager who ensures everyone follows the house rules. During the day, the residents are expected to either participate in an outpatient treatment program or work. The home has a curfew of 9 PM. No treatment services are provided by ABC Sober Living. They strictly provide a safe, structured and sober environment for the residents.

While out during the day, a resident decides to purchase heroin and bring it back to the home. The resident and their roommate end up using the heroin that evening and the roommate is found unresponsive the next morning. The cause of death is ruled a heroin overdose. The deceased roommate’s surviving family sues ABC Sober Living, asserting the provider’s negligence in allowing a resident to obtain and bring illegal drugs into the home and failure to monitor the decedent. The complaint states that ABC was responsible for providing a safe, sober environment for residents and their failure to do so was the proximate cause of the decedent’s death.

ABC has a commercial insurance policy, which includes property, general liability and sexual/physical abuse coverage. The general liability coverage included a clear professional liability exclusion. ABC was presented with an option for professional liability at their renewal but ultimately declined, believing it wasn’t necessary since they weren’t providing any type of treatment or traditional professional services.

The plaintiff’s attorney was ultimately successful in making the case that providing a safe, sober environment was a professional service that ABC failed to provide. Without professional liability coverage as part of their insurance package and given the professional liability exclusion within their general liability coverage, ABC’s carrier did not owe ABC a duty to defend or indemnify them in this matter. Instead, ABC was left to handle this matter on their own, incurring thousands in legal fees and settlement.

Unfortunately, the likelihood of this scenario happening is only growing as demand for sober living homes and recovery residences grows. The bottom line? Make sure you don’t pass up professional liability coverage prematurely. Investing in coverage proactively can easily prevent a catastrophic loss.

Working through your insurance broker/agent, ATP can help you navigate the complexities facing your sober living home or behavioral healthcare organization. Your broker/agent can reach out to me at any time at 610.808.9556 or [email protected]!