Babysitting & Nanny Insurance: Cost, Coverage & Providers
Nancy Fernandez is a Credit Card and Insurance Expert at Fit Small Business, specializing in business credit cards and business insurance.
Nanny insurance is a group of business policies, which can include general liability and professional liability, and are designed for individuals who care for children. Whether they work out of their home or someone else’s, nannies are protected by these policies in case of a lawsuit. General liability insurance for babysitters and nannies typically costs between $200 and $1,000 per year, and professional liability insurance usually costs around $840 annually.
Unfortunately, nannies can have a hard time finding coverage, but CoverWallet can be a big help. CoverWallet is an online broker that utilizes technology to quickly compare multiple quotes from top carriers to find a low-cost option that’s right for you. Get started today by filling out a free, no-obligation questionnaire online.
How Babysitting & Nanny Insurance Works
Nanny insurance protects your assets by covering risks that are common to the profession. For instance, a self-employed nanny needs general liability coverage in case someone accuses them of causing property damage or bodily harm. Nannies might also need professional liability to cover the cost of negligence claims and commercial auto if they drive for work.
Since no government agency regulates nannies, no government agency can issue a nanny license and require them to have insurance. The only situation where nanny insurance is required is when the family hires them as an employee. When that happens, most states require the family to get worker’s compensation insurance. This policy reimburses employees for their lost wages and medical bills if they’re injured on the job or suffer a work-related illness.
Who Babysitting & Nanny Insurance Is Right For
Nanny insurance is right for anyone who takes care of someone else’s children and for anyone who employs a nanny to take care of their kids. However, the person who is responsible for getting coverage depends on the work status of the nanny. Nannies who meet the IRS standards for self-employment need business insurance to protect their assets.
These are the IRS guidelines for determining who is an independent contractor:
- Behavioral: Independent contractors tend to have control over what they do and how they do it
- Financial: Independent contractors are less likely to be reimbursed for money spent out of pocket and more likely to be paid a flat fee
- Relational: Independent contractors usually sign contracts and are responsible for their own employment tax and health insurance
In most states, families that hire nannies are considered employers. That makes them responsible for payroll taxes and, in many states, workers’ compensation insurance.
Who Does Not Need Babysitting & Nanny Insurance
Nanny insurance is most appropriate for self-employed nannies and the families who hire nannies as employees. However, it’s not right for everyone. Some businesses, like nanny placement agencies and day care centers, face greater and different risks. Other situations are too informal and make insurance unnecessary.
Nanny and child care insurance isn’t appropriate for the following individuals:
- Nanny staffing agency owners
- Day care centers owners
- Home day care providers
- Teenage babysitters
Day care center owners and home day care providers can find detailed information about their insurance needs in our guide to day care insurance.
Nanny Insurance vs Day Care Insurance
Both nannies and day care providers take care of children. However, nannies are professionals who most often work in a family’s home. Day care providers may work in their own homes or a day care center and usually take in children from multiple families. These differences can impact their insurance needs.
The owner of a day care center most likely recognizes they’re a business owner, but home day care providers may see their services as casual babysitting. They own a home-based business and may even need a license depending on the number of children they care for. It also means they need more business insurance than a nanny. More detailed information is available in our article on day care insurance, mentioned in the section above.
Pro tip: Home day care providers need nanny insurance, as homeowner’s policies usually exclude business activities. Once you take money for your services, you’re essentially operating a business, even if it’s in your home. Check out our article on home-based business insurance for a list of common policies at-home providers usually need.
Self-employed Babysitting & Nanny Insurance Costs
The main type of nanny or babysitting insurance is general liability, which typically costs less than $70 per month. However, adding additional but necessary coverages—like abuse and molestation or professional liability insurance—can increase the rate. Nannies who drive their own car may spend the most on commercial auto insurance.
Nanny Insurance Costs & Deductibles by Insurance Type
Insurance Type | Coverage Limits | Annual Premium Cost | Deductible |
|---|---|---|---|
General Liability Insurance | $1 million/$2 million | $200 to $1,000 | $0 to $500* |
Abuse & Molestation Coverage | $25,000/$50,000 | Included with general liability | $0 to $500 |
Professional Liability Insurance | $25,000/$50,000 | $840 to $1,000 | $0 to $500 |
Commercial Auto Insurance | $100,000 | $850 to $4,200 | $0 to $500 |
Surety Bonds | $100,000 | $350 | $1,000 |
*Most insurers don’t require a deductible for these liability policies, but you can request one to keep your costs down.
Self-employed nannies and babysitters who work in a family’s home may not need as much coverage as those who watch children in their own homes. When children are out of their parents’ sight, misunderstandings can happen that lead to lawsuits. Unfortunately, filing claims can increase your premiums.
The same may be said for the parents who hire nannies. As an employer and a parent, you want to make sure everyone stays safe and happy.
In either case, you can reduce your risks and your babysitting insurance costs by:
- Using written contracts: Getting everything in writing may sound formal, but it’s a good way to make sure all parties know what they’re responsible for.
- Learning first aid and child care basics: Preventing injuries and providing immediate care when they occur can stop problems from getting worse and reduce the chance of a lawsuit; parents should make sure their nanny has appropriate training.
Types of Self-employed Babysitter & Nanny Insurance
The nannies who are independent contractors need nanny insurance to cover the risks associated with that status. The most important coverages for nannies are liability policies like general liability and professional liability. Many insurers combine these policies with abuse and molestation coverage for nannies. Some insurers also add commercial auto riders to general liability.
Most Common Types of Self-employed Babysitter & Nanny Insurance
Type of Insurance | What it Covers |
|---|---|
General Liability | Third-party accusations of bodily harm, property damage, and advertising injuries |
Abuse & Molestation | Accusations of sexual misconduct |
Commercial Auto | Value of insured vehicle when it’s stolen or damaged and the policyholder’s liability in accidents |
Disability Insurance | A portion of a nanny’s wages when they are unable to work due to an injury or medical condition |
Professional Liability | The nanny’s legal defense if a client accuses them of negligence |
Surety Bonds | The family’s financial loss if the nanny fails to provide services or is found guilty of theft |
General Liability Insurance for Nannies
General liability insurance covers your responsibility for accidents that cause property damage or bodily injury. It typically pays for medical expenses or repair bills, but it can also cover your legal defense. General liability also covers these costs when you’re accused of causing advertising injuries, like libel and slander.
Examples of situations where a nanny might need general liability insurance include:
- They knock over an expensive vase while playing with the children
- A child breaks a bone in a freak accident
- Another nanny claims they started rumors that resulted in the nanny’s termination
In events like these, general liability insurance protects your assets by covering the costs you would otherwise pay out of pocket.
Abuse & Molestation Coverage for Nannies
Working with children can put you at risk for accusations of sexual misconduct. Abuse and molestation insurance covers these accusations by paying your lawyer bills, investigation fees, and court costs. Policies can be purchased as standalones, but nannies usually get general liability policies with individual limits for abuse and molestation.
Businesses that provide nanny services often get abuse and molestation insurance to protect their liability when one of their employees is accused of sexual misconduct. However, the coverage seldom extends to the perpetrator in an intentional act. Nannies who work as independent contractors may still want abuse and molestation insurance, as it typically covers claims when you’re proven innocent.
Commercial Auto Insurance for Nannies
Nannies who drive their personal autos to pick up children from school or run errands probably need commercial auto insurance. It covers your liability in accidents by paying for the injuries and property damage you cause.
A nanny might get additional auto insurance coverage, like:
- Medical payments: For injuries you and your passengers sustain
- Collision: For damage to your car
- Uninsured & underinsured motorist: For when the other driver is responsible for damages but cannot pay
Personal auto policies typically exclude business-related driving, leaving nannies without coverage if they use their own car for work. However, a standalone policy may be too much insurance for nannies. Ask your agent about adding coverage to your general liability insurance.
Pro tip: If you hired a nanny, it is best to include them in your personal auto insurance. You can even list the nanny as a non-resident driver if they don’t live with you. However, note that if your nanny doesn’t frequently use your car, then they’re likely covered as a permissive user.
Disability Insurance for Nannies
Depending on state laws, families who employ domestic workers like nannies need to get workers’ compensation to cover their job-related illnesses and injuries. However, nannies who are classified as independent contractors or who work where state law doesn’t require workers’ comp may need disability insurance.
Disability insurance pays a portion of your salary when you can’t work due to a physical injury, illness, medical condition, or pregnancy. Generally, insurance premiums can go from 60% to 90% of your gross salary or net income, depending on the insurance carrier you’re opting to choose. However, you should note that there’s an elimination period, or waiting period, which is essentially the length of time before you can receive your disability benefits. You can be eligible to get your disability benefits on your 91st day if you select a 90-day elimination period.
Professional Liability Insurance for Nannies
A family may sue if they think you were negligent in your duties. For instance, a nanny may be accused of serving an allergen to a child or offering advice that causes an injury. If they do, professional liability insurance, also known as errors and omissions (E&O) insurance, covers your legal bills, paying for attorneys, court costs, and settlements or judgments that don’t go your way.
Traditionally, professional liability insurance is reserved for professionals, such as individuals who have completed required studies and have a set of standards to uphold. But insurers have responded to an increase in negligence lawsuits by offering E&O insurance to nontraditional professionals. Combine a litigious society with parents’ desire to protect their children, and professional liability insurance may be right for you.
Surety Bonds for Nannies
Some families only hire nannies who have a surety bond in addition to liability coverage. A surety bond isn’t so much a type of insurance as it’s a guarantee for the family. The bond provider promises to pay claims the family makes against you. Their willingness to offer you a bond is seen as a sign that you’re trustworthy.
Essentially, a surety bond provider agrees to pay if you:
- Steal from the family
- Fail to provide contracted services
- Cause damages
Few nannies carry bonds. While they can be relatively inexpensive, perhaps $200 per year, they’re tied to specific incidents. Liability coverage typically provides broader coverage.
Babysitting & Nanny Insurance Providers
Provider | Best For |
|---|---|
Nannies who want to compare policies and premiums from multiple carriers | |
Nannies who want fast quotes from top carriers | |
Day care providers who need coverage for field trips | |
Day care center owners looking for fast quotes on affordable insurance | |
Members of the American Federation of Daily-Care Services (AFDS) who care for children in their own homes |
CoverWallet
CoverWallet is an online insurance broker that utilizes technology to allow you to quickly compare multiple quotes from top carriers and find a low-cost option that’s right for you. The platform is well-known for its ease of use and simplicity, making it simple for small business owners to understand how to choose the proper coverage.
Self-employed nannies should work with CoverWallet since, as independent contractors, they’re responsible for their own coverage. CoverWallet makes the process easy by supplying multiple quotes for nannies to compare and see where their premium dollars go with each insurance carrier.
CyberPolicy
CyberPolicy simplifies the process of shopping for insurance online. They’re a reliable broker that shops and compares quotes on all types of business insurance policies from top carriers, such as Progressive Commercial, Chubb, Liberty Mutual, Nationwide, and more than 40 others. This ensures that you’ll get the right coverage for your business at an affordable price.
No matter the type of business you own, CyberPolicy will help make sure you’re protected. CyberPolicy strives to deliver fast and accurate rates from top insurers and simplify the process of getting nanny insurance you can rely on.
Philadelphia Insurance Companies
Philadelphia Insurance Companies is a specialty insurer that writes property and liability policies for select service industries. Most business owners connect with Philadelphia Insurance Companies through local agents and can find contact information on the company website.
Child care providers who offer field trips and after-school programs should work with Philadelphia Insurance Companies. The company’s child care insurance program includes the following:
- Auto coverages for buses, 15-seater passenger vans, and private passenger vehicles
- Corporal punishment coverage
- Business income coverage with a $300,000 limit under the Property Elite form
- Large excess limit
- Installment plans available for accounts generating at least $2,000 in premiums
AP Intego
If you’re a self-employed nanny and you want more help choosing an insurance provider, you can visit AP Intego. Its nationally licensed agents will shop and compare insurance options from top-rated insurance companies. Get multiple quotes online in minutes and choose the policy that’s right for you.
Markel
Markel is a specialty insurer that offers nanny insurance for in-home child care providers. Their general liability policy has limits up to $1 million per occurrence/$3 million aggregate and includes coverage for sexual misconduct allegations. It also offers coverages in defense or monetary judgment against your business up to $100,000 per occurrence/$300,000 aggregate.
Markel’s commercial child care program covers the following types of day care facilities:
- Licensed child care centers
- Nursery schools
- Montessori schools through kindergarten
- Preschools
- Before-school and after-school programs
Nannies who care for children in their homes can purchase this coverage through the American Federation of Daily-Care Services, a purchasing group set up by Markel. Membership costs $60 and includes access to the company’s nanny insurance and loss control services.
Types of Nanny Insurance for Families
Most nannies are hired as employees, meaning they don’t control the work they perform. The person who hires the nanny typically gives them directions, and that makes the individual an employer. It also changes the employer’s insurance needs.
People who employ nannies may need:
- Workers’ compensation insurance: There are 25 states that require you to carry workers’ comp to pay for a nanny’s job-related injuries and illnesses; even if your state doesn’t make coverage mandatory, you may opt in to protect your assets.
- Employer’s liability insurance: This policy is usually included in workers’ comp to cover your legal bills if the nanny claims your negligence caused their injury.
- Auto insurance: Granted, you probably already have auto insurance; however, you want to be sure to add your nanny as an occasional operator and to add uninsured or underinsured coverage if you don’t already have it.
- Personal umbrella liability insurance: Umbrella insurance can extend the limits of the liability coverage in your home insurance, which can come into play if a family you share a nanny with sues for an injury to their child.
- Renters Insurance: As live-in nannies, getting renter’s insurance can be viable to cover your private property. If you’re hired as an employee, your possessions may not be covered by your employer’s homeowner’s policy if a break-in, theft, or fire occurs.
An umbrella policy can also extend the limits of your auto insurance and employer’s liability insurance. The latter is uncommon, so be sure to ask your agent if employer’s liability is included.
Pro tip: Homeowner’s insurance won’t cover nannies, as they’re classified as Q-2 employees. Their income is usually reported on an IRS W-2 form, hence the family is treated more as either a business or entity having liabilities than a family with a home.
Bottom Line
Professional babysitters and nannies operate in a gray area. They need to clarify their work status to determine what sort of insurance covers their liabilities. Once they know if they’re independent contractors or employees, they can choose the coverage that makes sense for their risks.
CoverWallet can be a big help in getting coverage that makes sense for your risks. Once you fill out the free, no-obligation questionnaire online, CoverWallet’s technology quickly generates multiple quotes from top carriers and finds a low-cost option that’s right for you. Get started today.
