Daycare insurance is an important part of a successful daycare, protecting your business from claims of negligence or first-party losses to your business property. The two most common policies for childcare insurance are general liability and commercial property insurance.
While the price can vary depending on coverage, a general liability policy can range from $495 to $1,480 per year for in-home childcare and $1,100 to $2,200 per year for a commercial daycare center.
Next Insurance is an insurance provider that offers all of the coverage your daycare needs, along with the convenience of managing your policy on an app. In just minutes, it can generate multiple quotes with customized coverage for your business and lets you purchase a policy online.
Daycare Insurance Costs
Childcare insurance costs depend on the type of business, services provided, and the number of children you care for, among other factors.
Policy | Premium Range | Coverage Amounts |
|---|---|---|
General Liability for an In-home Daycare | $495 to $1,480 | $1 million per claim/$2 million aggregate |
General Liability for a Commercial Daycare | $1,100 to $2,200 | $1 million per claim/$2 million aggregate |
Commercial Auto | $1,100 to $4,400 | $300,000 combined single limit for bodily injury and property damage |
Property Insurance | $550 to $990 | $15,000 to $20,000 |
Workers’ Compensation | $5,500 to $7,200 | $100,000 bodily injury (per accident); $500,000 bodily injury policy limit, $100,000 bodily injury disease (per employee) |
Risk evaluation is at the center of an insurance company determining the premium. When preparing the quote, the provider will ask you questions about your claim history, services, and reputation.
- Claim history: Have you filed a claim in the last three years?
- Overnight care: Do you provide overnight care?
- Emergency contact: If you run an in-home center, do you have someone who can come immediately if there is an emergency?
- Background checks: Do you run background checks on your employees?
- Abuse allegations: Has your business or any of its employees ever been accused of abuse?
Be prepared to answer those questions and more. When completing the quote process, it’s important to be honest with the carrier so that it can quote a policy that has the coverage and limits that best suit your business needs.
Daycare Insurance Coverage Types
Each daycare business is different and has varying insurance needs. For example, an at-home childcare provider requires less property coverage than a commercial daycare center, which needs different coverage from a preschool run inside a church. Here are the most common policies for daycare businesses:
Type of Insurance | What it Covers |
|---|---|
General Liability | Third-party coverage for bodily injury, property damage, and reputational harm |
Commercial Auto | Injuries, damages, and lawsuits from accidents involving your business vehicle |
Property | First-party coverage for the building, equipment, and supplies |
Abuse & Molestation | Losses arising from an employee abusing a child under your care |
Workers’ Compensation | Wage replacement and medical bills for a work-related illness or injury to an employee |
Umbrella | Excess liability coverage |
Daycare liability insurance protects your business from third-party claims for bodily injury, property damage, and reputational harm. If you are renting a space for your daycare, most general liability policies have between $100,000 and $300,000 in coverage for damage to the property you rent. Because the financial risks associated with these claims can be significant, liability is a core policy every daycare owner should carry.
This policy applies in sample scenarios, such as if a child falls off a chair during snack time and gets hurt or if a competitor claims your business slandered them on social media. Given these instances, you could file a claim on your general liability policy.
Depending on the size of your daycare, transportation can be part of your business operations (e.g., providing transportation for children to and from their residences or from the daycare center to field trips).
You will need commercial auto insurance if your daycare has a dedicated vehicle for transporting children. Commercial auto, by law, needs to carry liability, which will pay for property damage and bodily injury if you are at fault for the accident.
In addition, if you are at fault, this bodily injury coverage extends to passengers in your vehicle. You should also consider first-party medical coverage and—depending on the vehicle’s value—collision and comprehensive coverages.
This first-party coverage protects your assets from named peril losses like fire or theft. You should purchase it if you own a building, equipment, or supplies (including furniture). It insures your property on an actual cash basis or a replacement cost. The actual cash value deducts depreciation from the claim payment, while the replacement value pays for what it will cost to repair or replace the item.
Usually, insurers will combine liability and property damage into a single policy called a business owner’s policy (BOP). This gives you the advantage of having your two most important policies in one package, and sometimes the premium is reduced when the coverages are combined.
The unfortunate reality is that accusations of sexual misconduct are a risk that daycare providers have to consider. This coverage may be included in your liability policy or as an endorsement. Some insurers will offer it as a standalone policy. Whether the charge has merit or not, if one is made, then costs to your business will be immediate and potentially high. This form of liability helps with legal costs.
Workers’ compensation insurance provides wage replacement and helps with medical costs if an employee suffers an illness or injury while on the job. A lot of everyday activities, such as lifting children in and out of a stroller, can lead to an injury for an employee, so not only is this coverage most likely required, but it also makes sense to have.
Umbrella insurance is an excess liability coverage that provides additional limits in case you have a claim that goes sideways and needs additional coverage. Note that claims can get costly fast, especially if litigation is involved. Beyond the peace of mind, an umbrella may be necessary if you rent a space for your daycare center and the landlord requires limits higher than your current liability policy.
Who Needs Daycare Insurance
If you operate a childcare business, then you need to consider insurance. Specifically, you should get childcare insurance if you run the following:
- Commercial daycare centers
- Home-based childcare centers
- Preschool programs
- Summer day camps
- Religious and nonprofit daycare centers
While daycare providers need to consider insurance, this isn’t the same as an occasional teenage babysitter. However, a professional nanny should look into babysitting and nanny insurance.
Workers’ Compensation Insurance Requirements for Daycares by State
Workers’ compensation is a coverage that is required in every state except for Texas and South Dakota. However, every state has different thresholds for when businesses are required to offer workers’ compensation to employees. Select your state to find its threshold.*
Workers’ Compensation Requirements: Coverage is required for businesses with five or more employees (part-time or full-time).
State Website: AL Government Agency
Workers’ Compensation Requirements: Any business with one or more employees must offer workers’ compensation.
State Website: AK Government Agency
Workers’ Compensation Requirements: Any business with at least one employee, including part-time or family members, must provide workers’ compensation.
State Website: AZ Government Agency
Workers’ Compensation Requirements: Coverage is required for any employer with two or more employees.
State Website: AR Government Agency
Workers’ Compensation Requirements: Coverage is required for any business with at least one employee.
State Website: CA Government Agency
Workers’ Compensation Requirements: Required for any business with one or more employees, including part-time workers.
State Website: CO Government Agency
Workers’ Compensation Requirements: Any business with one employee, including full-time and contract workers, must offer workers’ comp.
State Website: CT Government Agency
Workers’ Compensation Requirements: Required for any business with one or more employees.
State Website: DE Government Agency
Workers’ Compensation Requirements: Required for any business with one or more employees.
State Website: D.C. Government Agency
Workers’ Compensation Requirements: Any business with four or more employees must offer workers’ compensation.
State Website: FL Government Agency
Workers’ Compensation Requirements: Any business with three or more employees must offer workers’ compensation.
State Website: GA Government Agency
Workers’ Compensation Requirements: Required for any business with one or more employees (including temporary employees).
State Website: HI Government Agency
Workers’ Compensation Requirements: Required for any business with one or more employees.
State Website: ID Government Agency
Workers’ Compensation Requirements: Required for any business with one or more employees, including part-time.
State Website: IL Government Agency
Workers’ Compensation Requirements: Required for any business with one or more employees.
State Website: IN Government Agency
Workers’ Compensation Requirements: Required for any business with one or more employees. Casual employees who make less than $1,500 during 12 consecutive months prior to an injury are exempt.
State Website: IA Government Agency
Workers’ Compensation Requirements: Required for all businesses with employees with a gross payroll over $20,000.
State Website: KS Government Agency
Workers’ Compensation Requirements: Required for any business with one or more employees.
State Website: KY Government Agency
Workers’ Compensation Requirements: Required for any business with one or more employees.
State Website: LA Government Agency
Workers’ Compensation Requirements: Required for any business with one or more employees.
State Website: ME Government Agency
Workers’ Compensation Requirements: Required for any business with one or more employees.
State Website: MD Government Agency
Workers’ Compensation Requirements: Required for any business with one or more employees.
State Website: MA Government Agency
Workers’ Compensation Requirements: Required for any business with one or more employees.
State Website: MI Government Agency
Workers’ Compensation Requirements: Required for any business with one or more employees.
State Website: MN Government Agency
Workers’ Compensation Requirements: Required for any business with five or more employees.
State Website: MS Government Agency
Workers’ Compensation Requirements: Required for any business with five or more employees.
State Website: MO Government Agency
Workers’ Compensation Requirements: Required for any business with one or more employees.
State Website: MT Government Agency
Workers’ Compensation Requirements: Required for any business with one or more employees.
State Website: NE Government Agency
Workers’ Compensation Requirements: Required for any business with one or more employees.
State Website: NV Government Agency
Workers’ Compensation Requirements: Required for any business with one or more employees.
State Website: NH Government Agency
Workers’ Compensation Requirements: Required for any business with one or more employees.
State Website: NJ Government Agency
Workers’ Compensation Requirements: Required for any business with three or more employees.
State Website: NM Government Agency
Workers’ Compensation Requirements: Required for any business with one or more employees.
State Website: NY Government Agency
Workers’ Compensation Requirements: Required for any business with three or more employees.
State Website: NC Government Agency
Workers’ Compensation Requirements: Required for any business with one or more employees.
State Website: ND Government Agency
Workers’ Compensation Requirements: Required for any business with one or more employees.
State Website: OH Government Agency
Workers’ Compensation Requirements: Required for any business with one or more employees.
State Website: OK Government Agency
Workers’ Compensation Requirements: Required for any business with one or more employees.
State Website: OR Government Agency
Workers’ Compensation Requirements: Required for any business with one or more employees.
State Website: PA Government Agency
Workers’ Compensation Requirements: Required for any business with four or more employees.
State Website: RI Government Agency
Workers’ Compensation Requirements: Required for any business with four or more employees.
State Website: SC Government Agency
Workers’ Compensation Requirements: There is no law in South Dakota requiring an employer to carry workers’ compensation.
State Website: SD Government Agency
Workers’ Compensation Requirements: Required for any business with five or more employees.
State Website: TN Government Agency
Workers’ Compensation Requirements: Workers’ comp is optional for businesses in Texas.
State Website: TX Government Agency
Workers’ Compensation Requirements: Required for any business with one or more employees.
State Website: UT Government Agency
Workers’ Compensation Requirements: Required for any business with one or more employees.
State Website: VT Government Agency
Workers’ Compensation Requirements: Required for any business with two or more employees.
State Website: VA Government Agency
Workers’ Compensation Requirements: Required for any business with one or more employees.
State Website: WA Government Agency
Workers’ Compensation Requirements: Required for any business with one or more employees.
State Website: WV Government Agency
Workers’ Compensation Requirements: Required for any business with three or more employees.
State Website: WI Government Agency
Workers’ Compensation Requirements: Required for any business with one or more employees.
State Website: WY Government Agency
*The threshold is subject to change by each state governing authority.
Daycare Insurance & License Requirements by State
States generally regulate daycare and require licenses to operate, and some require insurance to hold a license. The US Department of Health and Human Services provides contact information for the state agency in charge of licensure. Select your state for a brief description of your state’s requirements.
License Required:Yes. Unless the center is license exempt because it is an integral part of a ministry, child care centers must be licensed by the Department of Human Resources and renewed every two years.
Insurance Required: No
Coverages Required: N/A
License Required: Yes. A license is required. The license is issued by the Child Care Program Office of the Alaska Department of Health and Social Services.
Insurance Required: No
Coverages Required: N/A
License Required: Yes. A license is required to operate a daycare in Arizona. The license is issued by the Bureau of Child Care Licensing of the Arizona Department of Health Services.
Insurance Required: Yes
Coverages Required: General Liability with a $1,000,000 liability limit per occurrence with a $2,000,000 aggregate. The general liability must also carry $50,000 of damage to rented premises and $500,000 in abuse and molestation coverage. The certificate also must state that sexual abuse/molestation is included in the coverage.
License Required: Yes. A license is required to operate a daycare and is issued by the Division of Child Care and Early Childhood Education of the Arkansas Department of Human Services.
Insurance Required: Yes
Coverages Required: Daycares are required to carry a minimum liability policy with Minimum Child Care Liability Insurance Coverage Required: $500,000 per occurrence
License Required: Yes. A license is required to operate a daycare in California and is issued by the Child Care Licensing Program of the California Department of Social Services.
Insurance Required: Yes
Coverages Required: Family Child Care providers must carry liability insurance or a bond in the amount of $300,000 annually.
License Required: Yes. A family childcare home is required to be licensed. However, you can apply for a licensing exemption.
Insurance Required: No
Coverages Required: N/A
License Required: Yes. A license is required to operate a daycare in Connecticut and is issued by the Division of Early Childhood of the Connecticut Office of Early Childhood.
Insurance Required: No
Coverages Required: N/A
License Required: Yes. A license is required to operate a daycare in Delaware and is issued by the Office of Child Care Licensing of the Delaware Department of Education.
Insurance Required: No
Coverages Required: N/A
License Required: Yes. A license is issued by the Department of Children and Families.
Insurance Required: Yes
Coverages Required: General liability with a minimum of $100,000 of coverage per occurrence and a minimum of $300,000 aggregate coverage.
License Required: Yes. A license is issued by the Department of Early Care and Learning.
Insurance Required: No
Coverages Required: N/A
License Required: Yes. If you care for more than two children who are not part of your family then you must be licensed by the State Department of Human Services (DHS).
Insurance Required: No
Coverages Required: N/A
License Required: Yes. A state license is required for centers with seven or more children through the Department of Health and Welfare.
Insurance Required: N/A
Coverages Required: N/A
License Required: Yes. A license is required to operate a daycare in Illinois and is issued by the Illinois Department of Children and Family Services.
Insurance Required: Yes
Coverages Required: A minimum general liability policy with a minimum amount of $300,000 per occurrence.
License Required: Yes. A license is required to operate a daycare in Indiana and is issued by the Indiana Department of Family and Social Services Administration.
Insurance Required: No
Coverages Required: N/A
License Required: Yes. A license is issued by the Iowa Department of Human Services and is required for anyone carrying more than five children.
Insurance Required: Yes
Coverages Required: General liability occurrence limit of $1,000,000 with a general aggregate of $2,000,000.
License Required: Yes. A license is issued by the Kansas Department of Health and Environment.
Insurance Required: No
Coverages Required: N/A
License Required: Yes. A license is issued by the Division of Regulated Child Care within the Cabinet for Health and Family Services.
Insurance Required: Yes
Coverages Required: Minimum liability insurance of $100,000 per occurrence.
License Required: Yes. A license is issued by the Louisiana Department of Health.
Insurance Required: No
Coverages Required: N/A
License Required: Yes. A license is issued by the Maine Department of Health and Human Services.
Insurance Required: Yes
Coverages Required: A liability policy with minimum limits of $100,000 per person and $300,000 per occurrence for bodily injury.
License Required: Yes. A license is issued by the Maryland State Department of Education.
Insurance Required: Yes
Coverages Required: A liability policy with a minimum of at least $300,000 aggregate.
License Required: Yes. A license is issued by the Department of Early Education and Care.
Insurance Required: No
Coverages Required: N/A
License Required: Yes. A license is issued by the Michigan Department of Licensing and Regulatory Affairs.
Insurance Required: No
Coverages Required: N/A
License Required: Yes. A license is issued by the Mississippi State Department of Health.
Insurance Required: No
Coverages Required: N/A
License Required: Yes. A license is issued by the Missouri Department of Elementary and Secondary Education.
Insurance Required: No
Coverages Required: N/A
License Required: Yes. A license is required if you are caring for more than four unrelated children. The license is issued by the Montana Department of Public Health and Human Services.
Insurance Required: Yes
Coverages Required: Liability and property insurance must be current, but there are no specific requirements on the limits.
License Required: Yes. A license is issued by the Nebraska Department of Health and Human Services.
Insurance Required: Yes
Coverages Required: A liability policy with a minimum of at least $100,000 per occurrence prior to issuance of the license.
License Required: Yes. A license is issued by the Nevada Department of Human Resources, Division of Child and Family Services, Bureau of Services for Child Care.
Insurance Required: Yes
Coverages Required: General liability with a minimum limit of $1,000,000.
License Required: Yes. A license is issued by the New Hampshire Department of Health and Human Services, Child Care Licensing Unit.
Insurance Required: No
Coverages Required: N/A
License Required: Yes. A license is issued by the New Jersey Department of Children and Families, Office of Licensing.
Insurance Required: Yes
Coverages Required: General liability policy is required for commercial childcare centers.
License Required: Yes. A license is issued by the New Mexico Children, Youth and Families Department, Early Childhood Education and Care Division.
Insurance Required: No
Coverages Required: N/A
License Required: Yes. A license is issued by the New York State Office of Children and Family Services.
Only daycare centers serving three or more children for more than three hours a day must obtain a license or registration.
Insurance Required: No
Coverages Required: N/A
License Required: Yes. A license is issued by the North Carolina Division of Child Development and Early Education.
Insurance Required: Yes
Coverages Required: General liability insurance
License Required: Yes. A license is required for any person providing early childhood services for more than 5 children or more than 3 children under the age of 24 months.
Insurance Required: No
Coverages Required: N/A
License Required: Yes. A license is issued by the Ohio Department of Job and Family Services.
Insurance Required: No
Coverages Required: N/A
License Required: Yes. A license is issued by the Oklahoma Department of Human Services.
Insurance Required: Yes
Coverages Required: General liability insurance with a minimum of $200,000.00 per occurrence.
License Required: Yes. A license is issued by the Oregon Early Learning Division’s Office of Child Care.
Insurance Required: No
Coverages Required: N/A
License Required: Yes. A license is issued by the Pennsylvania Department of Human Services.
Insurance Required: Yes
Coverages Required: General liability with a minimum limit of $1 million per occurrence and $3 million general aggregate.
License Required: Yes. A license is issued by the Rhode Island Department of Human Services.
Insurance Required: No
Coverages Required: N/A
License Required: Yes. A license is issued by the SC Department of Social Services.
Insurance Required: No
Coverages Required: N/A
License Required: Yes. A license is issued by the South Dakota Department of Social Services.
Insurance Required: Yes
Coverages Required: A general liability policy with a minimum aggregate limit of $300,000.
License Required: Yes. A license is issued by the Tennessee Department of Human Services.
Insurance Required: Yes
Coverages Required: A general liability policy with a total minimum limit of $500,000.
License Required: Yes. A license is issued by the Texas Department of Health and Human Services.
Insurance Required: Yes
Coverages Required: A general liability policy with a minimum of $300,000 for each occurrence.
License Required: Yes. A license is issued through Utah’s Child Care Licensing program.
Insurance Required: No
Coverages Required: N/A
License Required: Yes. A license is issued by the Department for Children and Families.
Insurance Required: Yes
Coverages Required: N/A
License Required: Yes. A license is issued by the Office of Child Care Health and Safety.
Insurance Required: Yes
Coverages Required: A general liability policy with a minimum aggregate and occurrence limit of $500,000.
License Required: Yes. A license is issued by the Department of Children, Youth, and Families.
Insurance Required: No
Coverages Required: N/A
License Required: Yes. A license is issued by the Department of Health and Human Services.
Insurance Required: No
Coverages Required: N/A
License Required: Yes. A license is required of anyone who is paid to supervise four or more children under the age of seven. The license is issued by the WI Department of Children and Families.
Insurance Required: No
Coverages Required: N/A
License Required: Yes. A license is issued by the Wyoming Department of Family Services (DFS).
Insurance Required: No
Coverages Required: N/A
License Required: Yes. A license is issued by the Office of the State Superintendent of Education.
Insurance Required: No
Coverages Required: N/A
Best Daycare Insurance Companies
- Next Insurance: Best overall provider for daycare insurance
- Simply Business: Best for comparing quotes
- The Hartford: Best for residential daycares
- Markel: Best for commercial daycare centers
- Philadelphia Insurance Companies: Best for nonprofit preschools
Next Insurance: Best Overall for Daycare Insurance
Pros
- Get a quote and policy online
- Manage your policy and claims through an app
- Quotes provide flexibility for custom coverage
Cons
- Revenue limit of $5 million
- Commercial auto may be unavailable
- No 24/7 call center for claims
- Get daycare insurance for as low as $20.83 monthly; also offers a 10% discount if you pay for the policy in full
- Allows you to purchase insurance for your in-home daycare or a commercial daycare center; has an appetite for all types of daycares
- Provides iOS and Android apps that allow you to manage your policy, file claims, and get instant certificates of insurance (COI)
- Its liability policies come with abuse and molestation as well as errors and omissions coverage with separate limits
Daycare Insurance Cost: We received three quotes for general liability. Limits ranged from $500,000 to $3 million, and costs ranged from $60 to $65 monthly.
Financial Stability: Although it’s a newer company, it has an A- (Excellent) rating from AM Best.
Simply Business: Best for Comparing Quotes
Pros
- Available in all 50 states
- Manage your account online
- Compare quotes online to save money
Cons
- Customer service hours are limited to weekdays: 8 a.m.-8 p.m. ET, Monday through Friday
- To file a claim, you will need to contact the provider
- You cannot purchase commercial auto insurance from it
- Offers online quotes for general liability, professional liability, workers’ comp, and cyber insurance, with additional coverage available over the phone
- Partners with multiple providers to let you compare real-time, adjustable quotes for daycare and childcare insurance
- Allows you to purchase the policy online after selecting the right coverage.
- Has agents available during business hours if you prefer speaking to someone or if the initial request doesn’t produce a quote
Daycare Insurance Cost: While researching this article, we couldn’t receive an online quote because Simply Business wanted one of its agents to review the business in more detail.
Financial Stability: Travelers owns Simply Business and has an AM Best rating of A++ (Superior).
The Hartford: Best for Residential Daycares
Pros
- Coverage available for daycares nationwide
- Over 1 million small business insurance customers
- 24/7 call center for claims and customer service
Cons
- You cannot get a quote online for daycares
- Details on coverage and cost are not available online
- Covers both the children and employees on-site or off-site during supervised activities
- Has special insurance for participant insurance, like a soccer camp at your daycare
- Offers regular small business insurance and employee benefit coverage for residential daycares
Daycare Insurance Cost: You’ll need to work with a local agent to get a quote.
Financial Stability: The Hartford has over 200 years of insurance experience and a rating of A+ (Superior).
Markel: Best for Commercial Daycare Centers
Pros
- Appetite for riskier industries, like daycares
- Daycare insurance is available in all 50 states
- Commercial daycare insurance package with optional coverages
Cons
- Quotes are only available through an agent
- Complaints are slightly higher than average
- Limited information on coverage details available online
- Provides both in-home and commercial daycare coverage but is great for commercial centers because its claims support services and high limits
- Has background screening services for current and future employees
- Offers professional liability, general liability, and abuse and molestation coverage
Daycare Insurance Cost: We were unable to get a quote for this article.
Financial Stability: Markel is an established carrier with a rating of A (Excellent) by AM Best.
Philadelphia Insurance Companies (Phly): Best for Nonprofit Preschools
Pros
- Online account portal to manage your policy and claims
- Web-based risk management services
- Corporal punishment coverage optional
Cons
- No online quotes available
- Phly doesn’t publish any price ranges
- Has created a policy package designed for both nonprofit and for-profit daycares
- Has lower than the national average for complaints with the NAIC National Association of Insurance Commissioners
- Offers a liability policy that comes with limits of $1 million per occurrence and $3 million aggregate, with an option for abuse and molestation coverage and corporal punishment
Daycare Insurance Cost: You need to submit an online form to get a quote. Within 24 business hours, a Phly representative will follow up.
Financial Stability: Phly is owned by the global company Tokio Marine Holdings Inc., which has an AM Best rating of A++ (Superior).
Frequently Asked Questions (FAQs)
Daycare insurance covers your business by investigating and helping protect it from claims of negligence. It can also help repair or replace any property owned by the daycare.
Some license boards will require a daycare to be insured, but simply being unlicensed doesn’t mean you do not need insurance. Workers’ comp may still be required. Insurance is still a very important part of a successful business plan. One claim, if uninsured, could bankrupt your daycare.
The costs of daycare insurance vary depending on the type, size, and location of the daycare, among other factors. A liability policy for an in-home childcare center can range between $495 and $1,480 annually.
Bottom Line
Taking care of children presents an insurance risk. Whether you have a commercial daycare or in-home childcare, daycare insurance can protect your physical property and business assets against potential liability claims. Next Insurance is the best overall provider for childcare insurance and can give you a no-obligation quote in minutes.
