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 cover in home daycares. Do not make the mistake of assuming your homeowner’s policy will cover you. Do not expose yourself, your home, and peace of mind by ignoring the fact that you are running a business that needs its own insurance 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. 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). What type of businesses should obtain insurance coverage?
- Licensed child care center
- Montessori schools through Kindergarten
- Before-school and after-school programs
- Nursery schools
- Licensed daycare centers
- Project Head Start
- 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 as part of your home child care insurance package:
- General Liability Insurance: This insurance coverage—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 the cost of medical care, repair or replacement of property, and any legal settlements that may ensue. Make sure it includes Accident Medical Expense (AME) to cover costs above and beyond the deductible. You need to protect the children that are in your care.
- Commercial 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.
- Commercial Auto Insurance: If you use a vehicle to transport kids to or from your daycare (to the local park, for example) then you need commercial auto in case you’re in an accident.
- Professional Liability Insurance: 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 (not contractors) you are required in some states to obtain workers’ compensation to cover their lost wages and medical expenses if they are injured or become ill on the job.
Make Sure Your Business Policy Includes these Uncommon Coverages
There are a couple of daycare liability policies that we don’t talk about much that must be considered as part of your home daycare 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 claim is brought forth.
- Abuse and Molestation Liability: If you or one of your employees is accused of sexual abuse or misconduct, this coverage will help protect 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 off the primary property that you care for them. It provides liability and property damage protection.
- Special Event Insurance: If you host a large party or fundraising event on your property, this affords extra protection for general liability coverage and property damage.
How Much Does Daycare Insurance Cost?
Different variables affect the cost of insurance for a daycare including, but not limited to:
- If you’re an in-home or childcare center provider
- Whether or not you hire employees
- The coverage limits you choose for your policies
- Whether or not you take children off-site for field trips
- Whether or not you operate on personal property or 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.
The most important recommendation we can make is that if you operate a daycare in your home or elsewhere, you need to review coverage and risk exposure with a licensed insurance professional.
Get a Free Daycare Insurance Quote
Let us help you protect your business and keep your mind at ease. At CommercialInsurance.Net, your goal is to help 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 insurance company—or consider another coverage to protect your business.