What Is Care Home Insurance?
Care home insurance is a specialist package of covers designed to protect residential care homes, nursing homes, dementia care facilities, supported living providers, and domiciliary care agencies against the range of risks inherent in delivering regulated care services. The sector presents a distinctive combination of exposures: vulnerable residents in a residential setting, a large and often shift-based workforce, professional care obligations, and buildings that must remain operational at all times.
A typical care home insurance arrangement combines public liability, employers' liability, professional indemnity, buildings and contents, business interruption, and residents' property cover under a single policy structure. The specific covers required will depend on the type of care provided, the number of residents and staff, and whether the premises are owned or leased.
CQC Registration and Insurance Obligations
Care homes in England that provide regulated activities — including personal care, accommodation for persons who require nursing or personal care, and treatment of disease, disorder, or injury — must be registered with the Care Quality Commission (CQC) under the Health and Social Care Act 2008. Registration requires providers to demonstrate that they meet the Fundamental Standards set out in the Health and Social Care Act 2008 (Regulated Activities) Regulations 2014.
Whilst the CQC does not prescribe specific insurance limits, Regulation 17 (Good Governance) and Regulation 19 (Fit and Proper Persons Employed) create implicit obligations around financial resilience and professional accountability. In practice, most CQC-registered providers are expected by their commissioners, local authorities, and NHS contracting bodies to hold adequate professional indemnity and public liability insurance as a condition of commissioning agreements.
Legal Requirements
Care home operators are subject to several statutory obligations that make certain insurance covers legally required or effectively mandatory in practice:
- Employers' liability insurance — legally required under the Employers' Liability (Compulsory Insurance) Act 1969 for any business employing staff, with a minimum cover of £5 million. Care homes typically require significantly higher limits given the number of employees and the nature of the work.
- Motor insurance — required if any vehicles are used in connection with the business, including minibuses for resident transport or staff vehicles used for domiciliary care visits.
- CQC registration — providers of regulated activities must be registered with the CQC and demonstrate financial viability and governance arrangements consistent with the Fundamental Standards.
- Commissioning requirements — local authority and NHS contracts typically specify minimum public liability and professional indemnity limits as conditions of the commissioning agreement.
- Lease or mortgage requirements — most commercial lenders and landlords require buildings insurance as a condition of the agreement.
Key Covers for Care Homes
A comprehensive care home insurance policy typically includes the following core covers, though the specific structure will depend on the type of care provided and the size of the operation:
| Cover | What It Protects | Typical Limit |
|---|---|---|
| Public Liability | Claims from residents, visitors, or third parties for injury or property damage | £5m – £10m |
| Employers' Liability | Claims from employees for work-related injury or illness | £10m (statutory minimum £5m) |
| Professional Indemnity | Claims arising from alleged negligence in the delivery of care | £1m – £5m per claim |
| Buildings | Damage to the care home premises from fire, flood, storm, and other perils | Full reinstatement value |
| Contents & Equipment | Furniture, medical equipment, mobility aids, and operational contents | Agreed sum insured |
| Business Interruption | Loss of income if the home cannot operate following an insured event | 12 – 24 months indemnity |
| Residents' Property | Personal effects and valuables belonging to residents | Agreed sum insured |
| Legal Expenses | Employment disputes, regulatory investigations, and contract disputes | £100,000 – £250,000 |
Professional Indemnity and Medical Malpractice
Professional indemnity (PI) insurance is one of the most important covers for care home operators. It protects the business against claims arising from alleged negligence, errors, or omissions in the delivery of care services. In a care home context, this can include allegations of inadequate care planning, medication errors, falls prevention failures, or failure to respond appropriately to a deteriorating resident.
Nursing homes and providers employing registered nurses should consider whether their PI policy extends to clinical negligence claims, or whether a separate medical malpractice extension is required. The distinction matters: standard PI policies may exclude claims with a clinical or medical element, which is a significant gap for nursing home operators.
PI policies are typically written on a claims-made basis, meaning the policy in force at the time the claim is made — rather than when the alleged incident occurred — responds. Providers should ensure continuous cover is maintained and that run-off cover is arranged if the business ceases trading or changes insurer.
Employers' Liability for Care Staff
Care homes are among the most labour-intensive businesses in the UK economy. A typical residential care home employs care assistants, senior carers, domestic staff, kitchen staff, and management — often across multiple shifts. Employers' liability (EL) insurance is a legal requirement for any business with employees, with a minimum statutory limit of £5 million. In practice, most care home insurers provide a minimum of £10 million.
The care sector has a high incidence of manual handling injuries, musculoskeletal claims, and workplace stress claims. EL insurers will assess the provider's manual handling training records, risk assessments, and incident reporting procedures when underwriting the risk. Providers with robust health and safety management systems — including documented manual handling training and regular risk assessments — are likely to achieve more competitive terms.
Providers should also consider whether their EL policy extends to volunteers, work experience placements, and agency staff. Agency workers are typically covered by the agency's own EL policy, but this should be confirmed in writing before engaging agency staff.
Residents' Property and Personal Effects
Care home residents typically bring personal effects, clothing, and valuables into the home. Providers have a duty of care to safeguard residents' property, and claims for lost, damaged, or stolen items are not uncommon. A dedicated residents' property section within the care home policy provides cover for these items up to an agreed sum insured per resident.
Providers should maintain an inventory of residents' property on admission, including any items of significant value. High-value items such as jewellery or cash should be subject to specific safekeeping arrangements, and residents and their families should be informed of the policy's limits and exclusions.
Business Interruption Cover
Business interruption (BI) insurance is particularly important for care homes because the consequences of being unable to operate extend beyond financial loss — residents may need to be relocated at short notice, which is both operationally complex and potentially distressing for vulnerable individuals.
A care home BI policy should cover loss of income (fees receivable) following an insured event such as fire, flood, or storm damage that renders part or all of the premises unusable. The indemnity period — the length of time for which the policy pays out — should reflect the time required to reinstate the premises to a fully operational standard, which for a care home can be 18 to 24 months or longer given the specialist nature of the fit-out and the need to meet CQC requirements.
What Affects the Cost?
The premium for care home insurance is influenced by a range of factors that underwriters assess when pricing the risk:
- Type of care provided — nursing homes and dementia care facilities are rated as higher risk than residential-only homes due to the clinical element and the vulnerability of residents.
- Number of residents and beds — larger homes have higher exposure and typically attract higher premiums.
- Number of employees — employers' liability premium is directly linked to the size of the workforce and the wage roll.
- CQC rating — homes rated 'Good' or 'Outstanding' by the CQC are generally viewed more favourably by underwriters than those rated 'Requires Improvement' or 'Inadequate'.
- Claims history — a history of liability or professional indemnity claims will increase the premium and may affect the availability of cover.
- Buildings construction and age — older buildings, those with flat roofs, or those of non-standard construction attract higher buildings premiums.
- Health and safety management — documented risk assessments, manual handling training records, and incident reporting procedures can support competitive terms.
- Location — properties in flood-risk areas or areas with high crime rates attract higher premiums for buildings and contents.
Next Steps
Care home insurance is a specialist area that requires an insurer panel with experience in the health and social care sector. Standard commercial insurers may not have the appetite or expertise to underwrite care home risks appropriately, and the consequences of inadequate cover in this sector — given the vulnerability of residents and the regulatory environment — are significant.
Focus Insurance works with specialist insurers who understand the care sector and can structure cover to meet CQC governance expectations, commissioning requirements, and the specific risk profile of your home. To discuss your requirements, contact our team during business hours (Monday to Friday, 9:00am to 5:00pm).
Focus Insurance Services is authorised and regulated by the Financial Conduct Authority (FCA No. 717691). All cover is subject to underwriting acceptance and policy terms and conditions. This guide is for general information only and does not constitute advice. Cover requirements will vary depending on individual circumstances.
Important Disclaimer
This article is for general information and educational purposes only. Policy terms, conditions, and exclusions vary. For a personal recommendation tailored to your circumstances, please speak to one of our brokers.
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