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The insurance company advised that the ALF should have a policy in-regards to patients privacy.

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I agree, ask the ALF. They should be able to give you something in writing: it would be standard practice to have a document covering this sort of thing for residents and their families/guardians. It might include things like complaints procedures, fire safety and security, safekeeping and handling of medications etc etc etc. If the ALF has a website you might even be able to download a copy.
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I would ask the ALF what their policy is.
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I can't understand why an insurance company is concerned with privacy rights in AL??
AL can mean different things depending on where you live and how much you are paying for your accommodation. Higher end - usually urban - ALs often provide large suites or small apartments and are structured much more like IL with extra benefits. Less expensive, older or rural ALs can be structured much more closely to a nursing home model, the three closest to me provide a single room with space for a twin bed and a small seating area. Family I've had who lived in these places had little expectation of privacy, doors were not allowed to be locked unless the resident had gone out and more than once I witnesses staff unapologetically coming into the room to carry out their routines despite the fact the resident had visitors. And no, this wasn't 30 years ago and this was in the "best" facility in our area.
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Any time I went to visit my Dad when he had lived in Independent Living and later Memory Care, everyone use to knock on the door and wait for Dad to say "come in", and if he didn't, then if it was the Staff they would enter his room slowly and call out his name.

Dad always locked his door at bedtime, but of course the Staff had a master key in case Dad used his medical alert pendent.

Now, one thing I have noticed that some people refer Nursing Homes as Assisted Living. Where I live, these are two totally different facilities. State Laws would be different between the two but somewhat similar.
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I don't know what the insurance company is expecting, but the caregivers would have to have access to the rooms to check on things. It's like an apartment complex where the management and maintenance crew have access. Same thing. Most people will advise you not to have valuable or irreplaceable items in your room or AL apartment. Privacy? Lock the door when you are in your room. They will knock before entering.
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