Running a care home today involves more than providing excellent care for residents, it also requires meeting increasingly strict insurance and regulatory compliance standards. From fire safety and portable appliance testing (PAT) to tree maintenance and accurate rebuild valuations, care home operators are faced with many costs to be able to ensure their properties meet insurer requirements.
Many care homes struggle to balance expenses with operational budgets, leaving managers searching for practical strategies to reduce costs without compromising safety. Understanding insurer expectations and implementing proactive risk management measures can help care homes protect residents, maintain cover, and avoid costly penalties.
In this blog, we explore common challenges in care home insurance compliance and share some actionable solutions that may help operators manage costs.
Care home insurance compliance
Insurance requirements for care homes have evolved significantly. Insurers now demand higher safety standards and thorough documentation to help evidence the mitigation of risks. While these measures are designed to protect residents, staff and property, they can contribute to higher operational costs.
Areas such as fire safety, electrical testing, tree maintenance, and rebuild valuations can be particularly sensitive. Failing to meet these requirements can result in premium increases, invalidated cover or financial penalties, making it critical for care home managers to look into adopting a strategic approach to compliance.
Fire safety in care homes: solutions for kitchens
Deep-fat frying remains a popular cooking method in many care homes, but it is naturally regarded as a fire risk by insurers. As referenced in Brabner’s guest blog Fire Safety in Residential Care Homes, according to the London Fire Brigade, 41% of fires in residential care homes are caused by cooking and cookers, with another 21% attributed to other kitchen appliances. This highlights just how critical it is to manage kitchen fire risks effectively.
Commercial fire suppression systems are often required in kitchens, with installation costs starting at around £2,000*. Rather than eliminating deep-fat frying, care homes could consider phased installation of suppression systems or switching to lower-risk cooking equipment such as air fryers or ovens. Engaging a broker to negotiate with insurers could also allow you to implement temporary measures, such as enhanced fire detection or staff training, while systems are being installed. These strategies allow care homes to maintain menu offerings without compromising their insurance compliance.
In practice, some care home groups have found the costs of fire suppression systems prohibitive. For example, one client operating nine homes began installing suppression systems in each property to mitigate deep-fat fryer risk. After completing four installations, the group switched to commercial air fryers instead to reduce costs. This meant that the insurer was happy to remove the requirement for fire suppression systems and the use of air fryers also meant that there was reduced operational risks for staff, as deep fat fryers require large volumes of hot oil which can present a burn hazard. Cleaning also become simplified, which in turn helped improve kitchen efficiency, as deep fat fryers also require regular cleaning due to build up of ignitable greasy deposits within extraction and ducting systems that can cause fires if left uncleaned.
An option that care homes rarely tend to know about is that if a care home group has a large premium spend, brokers can sometimes request bursaries from insurers to help offset installation costs. Please contact us if you would like to learn more about this.
Tree maintenance and grounds liability: reducing risk and costs
Mature trees tend to improve the aesthetics of care home grounds but can present safety hazards if not properly maintained. Falling branches or overgrown roots may cause injuries or property damage, putting operators at risk and prompting insurer scrutiny. Read more about this topic in our Managing trees on or around your property, and your responsibility to do so blog.
Your responsibility as a landowner, or tenant, where a rental agreement places the responsibility for tree management on tenants**, involves managing the risk trees present in order to reduce risk of injury to you or someone else, as well as damage to your business’s premises or someone else’s property. Proactive tree maintenance, including scheduled professional inspections and keeping a detailed tree register, can help prevent costly emergencies and demonstrate due diligence. Combining tree care with existing grounds maintenance contracts can also help manage costs while supporting compliance with your legal responsibilities and potential insurance requirements.
Though the likelihood of injury to people from falling trees or branches is lower than the likelihood of winning the lottery, understanding the issues around tree safety, and fulfilling your legal obligation is critical.
Avoiding underinsurance and understanding business interruption
Many care homes underestimate the cost of rebuilding after a major incident, which can result in underinsurance penalties. To illustrate the real-world impact of underinsurance, we explore two scenarios based on the experience of a nursing home seeking our insurance advice in our The Unexpected Cost of Underinsurance to Your Business blog.
Our own Care & Social Welfare team have seen just how prevalent underinsurance is, as they saw some of our clients’ sums insured double or even triple after rebuild valuation assessments. For example, a sample of 10 of our Care & Social Welfare clients, with a combined original total sum insured of £19,653,160 went on to obtain valuation assessments following our advice; they achieved the correct cover at a total combined sum insured of £34,914,152 after conducting RICS-approved rebuild cost assessment surveys. In nine of these cases, the original sums insured were significantly below the true rebuild cost, leaving the homes seriously financially exposed in the event of a claim. One case, by contrast, was overinsured, meaning they were paying for more cover than they needed. This highlights the value of approved rebuild valuations to avoid both underinsurance and over-insurance.
Take a look at our at our Examples of Underinsurance flyer which shows more real-life scenarios of policyholders who have experienced the consequences of underinsurance; we also share anonymised examples of McClarrons clients who followed our recommendation to obtain a RICS-approved valuation to give them an accurate and reliable rebuild value for their property, and the resulting impact this had on their sum insured.
RICS-approved reinstatement cost assessments provide accurate, insurer-accepted valuations that reflect current building regulations, material and labour costs, inflation, and any recent renovations. We have partnered with RebuildCostASSESSMENT.com, a RICS-regulated provider of desktop rebuild cost assessments, which offers a convenient alternative to a full on-site property assessment, helping you determine an accurate sum to insure your buildings for. Prices for RebuildCostASSESSMENT.com start from £199.75, but we’ve arranged an offer for McClarrons’ clients to receive £20 off when placing an order online. Please contact us if you would like to take advantage of the discount.
Updating insurance policies promptly after property changes helps to ensure full cover and reduce the risk of claims being partially rejected due to underinsurance. Regular reassessment, ideally every three to five years, is key to maintain accurate insurance cover and protect the financial stability of the care home; insurers may even request this as part of the conditions of your policy.
Business interruption indemnity periods are another often-overlooked area of underinsurance. I this context, the indemnity period is the amount of time for which your policy will cover you for business interruption losses. While many homes insure for 24 months, our experience shows 3–5 years is more realistic for homes to recover depending on the type of claim, their size, listed status, and construction methods. This longer indemnity period can provide peace of mind by providing financial stability during extended rebuilding or regulatory delays. We have to appreciate that in the event of a fire, it can be months before the property is signed back to the owners to begin the rebuild process. The best part of a year could pass without anything happening on-site of a total loss claim, for many reasons such as obtaining quotes for work, awaiting relevant planning permissions, builders not to be able to start work immediately, debris removal and site clearance, the site needing to be safe to work on.
Quite often, a rebuild valuation can include a suggested minimum indemnity period. From our experience, 36 months should be used as a minimum but it could very well be that it should be more depending on your operations and property, which is why a comprehensive rebuild valuation is recommended.
Portable Appliance Testing (PAT): meeting insurer requirements
Electrical safety is another critical compliance area. While some care homes attempt to perform PAT testing internally to save costs, insurers typically require testing to be carried out by a qualified professional. Using unqualified staff can, depending on your policy terms, invalidate cover in the event of an electrical fault.
The most effective solutions include hiring accredited contractors or training internal staff with recognised certification. Keeping digital records of all testing not only helps evidence and meet compliance but can also help streamline policy renewals and claims processes.
Available staff training support
Beyond physical risk management, care homes should also review their staff training, CQC preparation, and risk assessments. Some insurance policies include access to consultants as part of the cover, reducing or eliminating the need for external consultants. At McClarrons, we maintain panels of trusted providers who offer discounted services to clients, helping save both time and money.
To support this further, we launched an enhanced McClarrons Care Network in 2023, giving care and social welfare clients access to exclusive offerings from sector specialists. This includes services in quality consulting, regulatory support, and discount programmes that are otherwise generally unavailable. Through the network, clients can benefit from expertise in areas such as CQC compliance and legal advice, adding extra value on top of standard insurance services.
Strategic approaches for managing insurance costs
Insurance compliance in care homes is ever evolving, reflecting a greater focus on safety, risk management, and operational resilience. While the upfront costs may appear high, failing to meet requirements can result in far greater financial and operational risks.
Setting aside an annual budget for maintenance, safety upgrades, and inspections help prevent emergency spending and allows for planned investment. Clear records of inspections, staff training, and maintenance demonstrate compliance and can improve relationships with insurers, with the potential for more favourable renewal terms.
Early engagement with a knowledgeable broker also helps operators understand obligations, negotiate practical solutions and identify potential cost savings.
For guidance on your insurances or a complimentary review, contact our specialist Care & Social Welfare Team on 01653 600477 or at care@mcclarroninsurance.com.
Sources:
* https://www.mybuilder.com/electrical/price-guides/fire-suppression-system-cost
** https://www.trees.org.uk/Trees.org.uk/media/Trees-org.uk/Documents/GuideToTreesAndTheLaw-Web.pdf
