SENATE BILL REPORT

SB 6527

BYSenators Kreidler and Bailey

Providing liability insurance to foster parents.

Senate Committee on Children & Family Services

Senate Hearing Date(s):January 31, 1990

Majority Report:     That Substitute Senate Bill No. 6527 be substituted therefor, and the substitute bill do pass and be referred to Committee on Ways & Means.

     Signed by Senators Smith, Chairman; Craswell, Vice Chairman; Bailey, Stratton, Vognild.

Senate Staff:Carol Pedigo (786-7417)

                February 2, 1990

AS REPORTED BY COMMITTEE ON CHILDREN & FAMILY SERVICES, JANUARY 31, 1990

BACKGROUND:

During the last session of the Legislature some foster parents reported that they were unable to obtain insurance which would provide liability protection for them should they be sued by the natural parents of their foster children.

Until 1985, DSHS provided liability insurance with up to $1 million coverage to all licensed foster homes.  At that time the premiums almost doubled in cost causing the department to cancel the policy.

The Attorney General's office represents licensed foster parents in any lawsuit brought against them which arose from their good faith provision of foster care services.  However, there is no provision for payment of any judgment that may be entered against the foster parents.

The Department of Social and Health Services (DSHS), the Department of General Administration's Office of Risk Management and the Office of the Insurance Commissioner were required to develop a task force to study the issue and report to the Legislature regarding options to solve this problem.  The four responsibilities of the task force were to determine:  (1) the number of foster care homes carrying homeowners or tenants insurance; (2) whether foster parents can obtain homeowners or tenants insurance that protects them from lawsuits by foster children, their natural parents or guardians and if coverage is available under these insurance policies; (3) whether commercial insurance is available and affordable on a group basis to cover foster parents who are sued by the foster child or their natural parent; and (4) whether non-insurance options such as a fund established by the Legislature would be a more economical and efficient means of providing coverage for foster parents.

The task force made the following findings:  (1) Out of a total of 257 licensed foster families responding to a survey, 227 purchased homeowners or tenants insurance; (2) homeowners or tenants insurance provides protection from lawsuits by the natural parents or guardians, but since insurance companies consider a foster child to be a member of the foster parent household, most policies exclude protection for foster parents if they are sued by the foster child or by any person on behalf of the foster child; (3) commercial insurance companies will write coverage on a group basis for foster parents who are sued by the foster child or their natural parent or guardian at approximately $400,000 per year; and (4) some states have established a self insurance fund to provide coverage for foster parents.

At the current time DSHS provides up to $5,000 of reimbursement for property damage to foster homes or third parties, or $1,000 for initial emergency medical treatment caused by acts of foster children.

SUMMARY:

The Legislature finds that foster parents face financial risks by caring for foster children in their homes and that this liability is one likely reason for the shortage of available foster homes.

DSHS is directed to provide liability insurance to licensed foster parents.  Unless the foster parent has professional liability insurance which is primary, this foster parent liability insurance shall be primary, with no deductible, in an amount not to exceed $1 million for bodily injury and property damage.  This insurance shall not cover illegal conduct, gross negligence, or bad faith acts.  The Secretary of DSHS is directed to choose to either purchase the insurance or use a self-insurance method of providing this coverage.  It is specified that the current foster parent reimbursement plan is not modified.  The insurance program is to be available by July 1, 1990.

EFFECT OF PROPOSED SUBSTITUTE:

The method of provision of foster parent liability insurance is moved to the state self insurance liability account.  If appropriations are not available through that account, the language in the original bill directing DSHS to provide the coverage prevails.

Appropriation:  none

Revenue:   none

Fiscal Note:    available

Effective Date:July 1, 1990

Senate Committee - Testified:   PRO:  Senator Kreidler, prime sponsor; Don Knapp, Foster Parents Association; Gary Alexander, GA Risk Management; John Weeden, DSHS; Lee Anne Miller, DSHS-AAG