Senior Living Insurance: The Risks Most Operators Overlook

If you operate a senior living community — whether that's an assisted living facility, a memory care unit, or a continuing care retirement community — you already know that the regulatory and operational complexity of this business is unlike almost anything else in commercial real estate. What you may not fully appreciate is how dramatically the insurance landscape has shifted beneath your feet in recent years, and how much exposure your current program may be leaving unaddressed.

I spend a meaningful portion of my time working with senior living operators, and the pattern I see repeatedly is the same: operators are aware they have liability exposure, but they underestimate both its severity and its rate of growth. That gap between perception and reality is where coverage fails — and where the financial consequences can be devastating.

The Claims Environment Has Changed Materially

Let me start with the numbers, because they are striking. According to Argentum and Marsh McLennan research published in early 2025, the senior living industry paid out approximately $1.8 billion in indemnity over the past decade across roughly 10,300 closed liability claims. The forecasted claim frequency is 0.31 claims per 100 occupied units — which sounds modest until you run the math across a multi-community portfolio.

More concerning than frequency is severity. The CNA 12th Edition Long-Term Care report tracked by Marsh MMA puts the average claim at $259,443, up 3.8% since 2021 — and that figure masks a wide distribution. Assisted living facility claims run roughly 14% higher than skilled nursing facility claims on average, driven in part by the assumption-of-care dynamics and residents' higher functional independence when they move in. Abuse and neglect claims have surged: up 46.7% in skilled nursing and 17.3% in assisted living.

At the higher end of the spectrum, nuclear verdicts — eight-figure jury awards — are becoming a real possibility in senior care cases, particularly when abuse allegations or elopement incidents are involved. Amwins noted in September 2025 that slip-and-fall cases that once settled in the $150,000 range are now resolving at $350,000 or more, driven by plaintiff-friendly litigation strategies and third-party litigation funding that allows cases to be pressed much further than they would have been in prior years.

Where Most Coverage Programs Fall Short

Given this environment, the insurance market has responded — but not in a way that benefits operators. Carriers have been exiting the space or tightening terms significantly. Memory care units face higher deductibles, broader exclusions around elopement and wandering, and in some cases outright declinations from markets that previously covered them without issue. The market is fragmented, and placing a comprehensive program for a multi-facility portfolio now requires real specialty market access that many generalist brokers simply do not have.

Here are the specific gaps I most commonly find when reviewing existing senior living programs:

• Abuse and molestation sublimits that are far too low. Many operators carry $1 million in abuse coverage as part of a broader liability policy. Given a 46.7% surge in abuse claims in skilled nursing and the litigation funding dynamics that are extending case timelines, that sublimit is insufficient for most portfolios larger than a single small community.
• Elopement and wandering exclusions that operators don't notice until a claim is denied. Memory care operators in particular need to scrutinize how their policies define and treat wandering incidents. Some carriers have added broad elopement exclusions that can apply even to incidents that occurred outside the primary care suite.
• Business interruption coverage that doesn't reflect actual revenue complexity. Senior living revenue is a mix of private pay, Medicare, Medicaid, and managed care — and the calculation of business income loss needs to reflect that complexity. A standard BI form designed for a hotel or office building will not capture it accurately.
• Property programs that haven't kept pace with aging infrastructure. Seneca Insurance flagged in late 2025 that many senior living buildings are 30 to 40 years old and hitting critical failure points in their HVAC, plumbing, and life-safety systems. Deferred maintenance doesn't just create operational risk — in litigation, it becomes evidence of negligence, creating a simultaneous property and liability exposure that a poorly structured program handles clumsily.
• Directors and officers and employment practices liability that hasn't been revisited since the COVID-era staffing crisis. Regulatory actions against senior living leadership have increased as states add new oversight mechanisms. A D&O policy that was adequate in 2021 may have been renewed at the same limits without anyone reviewing whether the exposure has grown.

The Regulatory Wave Is Adding New Layers of Exposure

The second major development operators need to understand is the accelerating pace of state-level regulation — and the insurance implications of non-compliance.

2026 is shaping up to be a particularly active year on the regulatory front. Hansen Hunter's April 2026 legislative tracker highlights significant new requirements across multiple states: Massachusetts enacted emergency preparedness mandates following the Gabriel House fire in July 2025; Washington State's new Medicaid resident protections took effect January 1, 2026; and Minnesota passed ownership accountability legislation affecting contract succession arrangements. Meanwhile, Activated Insights reported in March 2026 that states broadly are tightening requirements around infection control protocols, dementia care staff training, staffing transparency reporting, and outcome-based compliance documentation.

This matters for insurance in two ways. First, regulatory fines and penalties are generally excluded from standard general liability policies — operators need to evaluate whether their program includes coverage for regulatory defense costs and, where insurable by state law, civil penalties. Second, documented non-compliance with a state standard can be used as evidence of negligence per se in civil litigation, which elevates the severity risk on bodily injury claims significantly.

The practical implication: if your compliance function hasn't been keeping up with 2025 and 2026 regulatory changes at the state level, your liability exposure is higher than your policy limits suggest — because an adverse regulatory finding can turn a marginal claim into a plaintiff's strongest argument.

What a Well-Structured Program Looks Like

Given this environment, here is what I typically recommend when working with senior living operators to build a comprehensive program:

• A specialty healthcare liability form — not a general CGL with healthcare endorsements — placed with a carrier that has genuine senior care underwriting depth and claims handling experience in this space.
• Abuse and molestation limits that are sized appropriately for portfolio scale, not the minimum that fits within the premium budget.
• A property program that has been updated to reflect accurate replacement cost valuations, including life-safety system replacement costs, and that is placed with a carrier comfortable with the building vintage of your portfolio.
• Business interruption coverage structured with a healthcare revenue specialist who understands the payer mix complexity of senior living.
• A management liability tower (D&O, EPL, and fiduciary) that has been reviewed in light of current regulatory exposure — not simply renewed at prior terms.
• A workers' compensation program with robust return-to-work protocols, given the high-frequency injury environment in direct care roles.

The Bottom Line

Senior living is one of the most operationally complex and litigation-exposed sectors in commercial real estate, and the gap between what most operators carry and what they actually need has widened meaningfully over the past few years. The combination of rising claim severity, nuclear verdict risk, carrier market contraction, and accelerating state regulation has created a coverage environment where a program that looked adequate at renewal three years ago may now have significant gaps.

The most important step is a thorough program review by someone who specializes in this space — not a generalist who handles a few senior living accounts, but an advisor with deep market access to the specialty healthcare liability carriers and the underwriting relationships to place complex, multi-facility programs in a difficult market.