What is Daycare Insurance?
Daycare insurance is for anyone who provides home child care to someone else’s children, either at home or in a licensed childcare center or school. Most states—if not all—require you to carry an insurance policy to become a licensed daycare provider. Daycare insurance can either be an extension of your homeowner's policy (which is rare) or a commercial insurance package of different policies to protect your business.
The Misconception of Home Daycare Insurance
A huge mistake made by home child care providers is assuming that their homeowner’s insurance will include coverage for in-home child care. Do not make the mistake of assuming your homeowner’s policy will cover you. You are running a business that needs its own coverage.
American Family Insurance is one of the only insurance companies that provide in-home child care insurance as an extension of your homeowner's policy. Most others offer standalone liability coverage. Do your due diligence and make sure you have home daycare insurance coverage so you don't sustain a devastating personal loss if something were to occur.
Who Needs Daycare Insurance?
Most states that license daycare providers will require some proof of daycare insurance. However, there is normally a size provision and many of these daycare businesses operate just below the size requirement (i.e. AmFam allows you to extend your homeowner's policy to cover up to 6 non-biological children). These are some of the types of businesses that need insurance coverage?
- Licensed child care center
- Montessori schools through Kindergarten
- Before-school and after-school programs
- Nursery schools
- Licensed daycare centers
- Project Head Start
- In-Home daycare providers
When you operate a daycare business, you are exposing yourself to a huge risk. An unintentional accident exposes you to great loss. If you are found guilty or negligent, you can be held personally responsible for all legal fees and judgments. Settling this type of judgment can put a huge burden on you, your business, and your family.
What Does Daycare Insurance Cover?
These are the insurance policies you should consider including as part of your home childcare insurance program:
General Liability Insurance
General Liability Insurance—sometimes referred to as daycare liability—provides coverage if a child is injured or any of their belongings are damaged while in your care. It can cover medical bills, the repair or replacement of damaged property, and any legal settlements that may ensue. Your insurance will provide you a legal defense, cover legal fees, and pay claims or settlements if you're sued. You also want to make sure your liability insurance covers Accident Medical Expense (AME). AME covers claims that go above and beyond the deductible.
Commercial Property Insurance
Commercial Property Insurance is also referred to as business property insurance. If you’re operating your business in your home, your homeowner's policy may cover the cost of repair or replacement if your home is damaged. However, check with your agent and go over your policy with a fine-tooth comb to be sure there’s coverage. If not, consider a commercial property policy.
Business Owner's Policy
A business owners' policy (BOP) combines general liability coverage, commercial property, and business interruption coverage. It’s often packaged at a more affordable price than obtaining the policies separately. Many small business owners opt for this coverage whenever it's available because of how comprehensive it is compared to the cost.
Commercial Auto Insurance
If you use a vehicle to transport children to or from your daycare (to the local park, for example) then you need commercial auto insurance in case you’re in an accident. If you have commercial auto, it will help cover the damage to any property, your car, and any necessary medical treatment for you or the child.
Professional Liability Insurance
Why do you need professional liability? Any decisions you make as a daycare provider, teacher, etc. where you use your professional opinion can be questioned. If your choice supposedly leads to an illness, injury, or loss—you can be sued. Professional liability insurance will protect your childcare business.
Workers' Compensation Insurance
If your childcare center or home daycare business hires employees—part-time or full-time—most states require you to obtain workers’ compensation insurance. Workers' compensation will cover their lost wages and medical expenses if they are injured or become ill on the job until they can return to work.
Umbrella Liability Insurance
Commercial umbrella insurance helps you cover any additional costs that exceed the liability limits of the underlying policy. If a judgment against you extends beyond the $1 million of coverage you have for claims, your insurance company can help pay the remainder. Some umbrella policies may include coverages that an underlying policy excludes, which can help you fill a coverage gap. If you run a large day care, work with high net-worth families, or have numerous employees, this policy may make sense for you.
Make Sure Your Business Insurance Policy Includes these Coverages
There are a couple of daycare liability policies that we don’t talk about much that must be considered as part of your daycare center insurance:
- Corporal Punishment Liability: If you or one of your employees is accused of spanking and/or hitting a child, this coverage helps protect you if a parent or legal guardian were to file a claim.
- Abuse and Molestation Liability: If you or one of your employees is accused of sexual abuse or misconduct, abuse and molestation liability will help protect you and your business. Fines and/or legal costs and medical expenses would be covered.
- Field Trip Insurance: This offers protection if you take the children to an event outside of the daycare facilities where you typically care for them. It provides liability and property damage protection.
- Special Event Insurance: If you host a large party or fundraising event, this affords extra protection for general liability coverage and property damage.
How Much Does Daycare Insurance Cost?
Different variables affect what you'll pay for the coverage you need, including but not limited to:
- If you’re an in-home or child care center
- Whether or not you hire employees
- The number of children your care for
- The coverage limits you choose for your policies
- Whether or not you take children off-site for field trips
- Whether or not you operate in your home or a commercial property
A common insurance limit you’ll see for a general liability insurance policy is $1 million per occurrence/$3 million aggregate. In-home child care insurance policies start between $250–$500 a year or as low as $31 a month, depending on the insurance company.
If you operate a daycare in your home or elsewhere, you need to review coverage and risk exposure with a licensed insurance agent. They can look at the risks you face and help you choose the right insurance with the light limits to help protect your business. They can also help insure that you don't pay more than you need to.
Get a Free Child Care Insurance Quote
Our goal at Tivly is to help you find great commercial insurance quote(s) for your daycare business. To get a competitive quote, complete the form at the top of the page or give us a call at 1-877-907-5267.
Please Note: Not all homeowner's policies will extend coverage to home daycare centers. It is not available in all states. Make sure you speak with an agent about the insurance products available to you through your current insurer—or consider another coverage to protect your business.