Technology brings promise and peril to senior care facilities. As artificial intelligence reshapes everything from medication management to fall detection, insurance coverage needs to catch up. Traditional policies weren’t built for robots that lift patients or AI systems that monitor vital signs. These gaps leave facilities exposed to new kinds of risk that nobody thought about five years ago. That’s where Scott Reese, founder of Echo Assurance, sees trouble brewing. With years of experience in both insurance and senior care, he’s learned that protecting against AI risks takes more than just updating old policies.
Five Critical Insurance Gaps in AI-Driven Care
Old insurance policies don’t play well with new technology. Scott breaks down why: “Traditional PL/GL policies struggle with AI-related risks.” He points to five key problems that traditional policies won’t touch below.
Professional Liability (PL) Gaps
Professional liability insurance used to be straightforward – it covered human mistakes. But throw AI into the mix, and things get messy. “AI systems, like fall detection and medication alerts, act autonomously,” Scott explains. This creates a puzzle: “Who is liable if a failure causes harm – provider, operator, or AI vendor?” The answer isn’t clear cut. Insurance companies might refuse to pay, claiming the problem came from faulty tech rather than human error. Scott’s solution? “Facilities may need specialized Tech E&O policies or endorsements explicitly covering AI-driven systems and their failures.”
General Liability (GL) Gaps
General liability insurance has its own AI problems. Take robotic lifting devices – if one malfunctions and hurts someone, regular policies might not help. Even worse, Scott points out that “AI failures may not cause physical harm but could lead to economic losses.” System outages that disrupt care? Most policies won’t touch that. Then there’s the cyber threat. “If bodily injury occurs due to a cyberattack that compromises AI tools, many standard GL policies exclude cyber-triggered claims,” Scott warns. His fix: get specific coverage for AI-related problems through additional endorsements.
Cyber Liability Gaps
While not technically part of PL/GL coverage, cyber insurance has become crucial for facilities using AI. But Scott sees dangerous gaps. Traditional policies might not help if hackers compromise AI monitoring systems or breach patient data. The solution sounds simple but requires careful attention: “Ensure cyber liability insurance specifically addresses AI-related breaches, ransomware, and associated liabilities.”
AI Bias and Discrimination
Discrimination claims from AI decisions create another headache. Most policies won’t cover problems from biased AI tools making care or hiring decisions. Scott’s advice? Add employment practices liability insurance that specifically addresses AI tools.
Business Interruption Gaps
Business interruption coverage needs updating too. If an AI system fails without physical damage, standard policies often won’t help. “Consider adding AI business interruption endorsements that cover system failures without requiring physical damage,” Scott suggests. Working with AI vendors adds another layer of complexity. “Many AI tools are provided by third-party vendors,” Scott notes. When things go wrong, it’s not always clear who’s responsible. His solution has two parts: carefully review vendor contracts and add extra coverage to protect facilities when vendor systems fail.
Practical Steps for Managing AI Insurance Risks
Getting the right coverage isn’t just about buying more insurance. It takes a strategic approach. Breaking down Scott Reese’s recommendations, here’s how facilities can protect themselves:
Step 1: Review and Update Current Coverage
Start with what you have. “Review and update PL/GL policies,” Scott advises. This means sitting down with insurers to find the holes in your coverage. Look specifically for places where AI might cause problems your current policies won’t cover. Where you find gaps, add endorsements to patch them.
Step 2: Add Specialized Protection
Regular insurance won’t cut it anymore. “Consider Tech E&O, cyber liability, and product liability policies tailored to AI use,” says Scott. These specialized policies fill the gaps that traditional coverage leaves open. They’re built specifically for the kinds of problems AI can cause.
Step 3: Partner Smart with Vendors
AI vendors are part of your risk picture. “Ensure vendors carry their own insurance, with proper indemnification agreements,” Scott emphasizes. Don’t just take their word for it – check their coverage. Make sure contracts spell out who’s responsible when things go wrong.
Step 4: Choose the Right Insurance Partners
Not all insurance companies get AI. Scott’s final piece of advice? “Partner with carriers who understand the unique risks of AI in senior care.” Find insurers who know the technology and understand how senior care facilities use it. They’ll be better equipped to help when problems arise. Scott’s approach shows that protecting against AI risks isn’t about avoiding technology – it’s about using it wisely. With the right insurance strategy, senior care facilities can embrace AI’s benefits while keeping their operations, staff, and residents safe. For facility operators, the message is clear: don’t wait for problems to happen. Start reviewing your coverage now, before you need it. The future of senior care is increasingly digital, and your insurance needs to keep pace.
To learn more about Scott Reese and his approach, check out his LinkedIn profile or visit www.scottyreese.com .
