Daycare Insurance Costs, Coverage & Best Insurers 2023
Daycare insurance is a combination of policies that give your business protection from claims of negligence or first-party losses. 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 for in-home childcare and $1,100 to $2,200 for a commercial daycare center.
Next Insurance is an insurance provider that offers all of 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 how many 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 like:
- Claims history: Have you filed a claim in the last three years?
- Overnight care: Do you provide overnight care?
- Emergency contact: For 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 going through the quote process, it is important to be honest with the carrier so that it can quote a policy that has the coverage and limits fit for your business needs.
Do you want to learn how to get quality coverage at an affordable price? See our guide on the ways to save money on business insurance.
Daycare Insurance Coverage Types
Each 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 |
This policy gives your business protection from third-party claims for bodily injury, property damage, and reputational harm. Liability also protects the building structure in case you damage the rented space. Because the financial risks associated with these claims can be significant, liability is a core policy every daycare owner should carry.
Sample scenarios where this policy applies is if a child falls off a chair during snack time and gets hurt and if a competitor claims your business slandered them on social media. You could file a claim on your general liability policy given these instances.
Did you know?
Many daycare providers use liability waivers. However, they are typically unenforceable because the child has no say and would allow the daycare provider to act negligently without consequences.
Some daycare centers provide transportation for children, either to and from their residence or from the daycare center to field trips. If your daycare has a dedicated vehicle for transporting children, you will need commercial auto insurance. 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 value of the vehicle—collision and comprehensive coverages.
As a first-party coverage, property insurance protects your assets from named peril claims like fire, theft, or wind. This is what you want to purchase if you own a building, equipment, or supplies
It will insure 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 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.
Did you know?
A standard homeowner’s policy typically excludes coverage for any in-home daycare service. You may be able to purchase an endorsement for your homeowners, but if not, you should consider a separate BOP to protect your business.
The unfortunate reality is accusations of sexual misconduct are a risk 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.
Most states require businesses with one employee or more to purchase workers’ compensation insurance. It 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 coverage that provides additional limits in case you have a claim that goes sideways and needs additional coverage—and claims can get costly fast, especially if litigation is involved. Beyond the peace of mind, an umbrella may be necessary if you are renting a space for your daycare center and the landlord requires limits higher than your liability policy.
Daycare Insurance & License Requirements by State
States generally regulate daycare and require licenses to operate, and some require insurance to hold a license. The United States Department of Health and Human Services (HHS) provides contact information for the state agency in charge of licensure.
To find a brief description of your state’s requirements, click on your state in the drop-down:
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 Minnesota Department of Human Services.
Insurance Required: Yes
Coverages Required: A liability policy with a minimum of $100,000 per incident and $250,000 per occurrence.
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
Note: The information provided is only the requirements to get a state license or register with the state. Cities and counties may have additional requirements. Moreover, most states mandate employers to carry workers’ compensation, even if they don’t require it for a license.
Who Daycare Insurance Is Right For
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
- 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.
Best Daycare Insurance Companies
- Next: Best overall provider for daycare insurance
- Simply Business: Best for comparing quotes
- Markel: Best for commercial daycare centers
- Philadelphia Insurance Companies: Best for preschools
- American Family: Best for in-home daycare
Next Insurance: Overall Best for Daycare Insurance
Next is the best provider because its fast quote and policy purchase experience and options give it the feel of a broker. Also, its app and policy management system give it an edge in convenience over the other insurers listed here.
You can get a quote and purchase a policy in just minutes. One quote comes with multiple options for coverage for in-home child care and is often designed to give you tiered results, giving you greater flexibility. What’s more, it handles claims in-house, so it will be your only point of contact, and although it is a newer company, it has an A- (Excellent) rating from AM Best.
Simply Business: Best for Comparing Quotes
As a digital broker, Simply Business partners with multiple providers to let you compare real-time, adjustable quotes for daycare and childcare insurance. It also offers liability, property, and workers’ comp insurance. After selecting the right coverage, you can then purchase the policy online. If you prefer speaking to someone or if the initial request doesn’t produce a quote, it has agents available during business hours.
It works with top-rated carriers with financial ratings ranging from A- (Excellent) to A++ (Superior). Travelers, which owns Simply Business, has an AM Best rating of A++ (Superior). It’s important to note that if you seek a dedicated provider who will service the policy and handle claims, then consider Markel or Next. Both carriers offer quality daycare insurance and handle in-house policy services and claims.
Get a Quote from Simply Business
Markel: Best for Commercial Daycare Centers
Markel, which provides both in-home and commercial daycare coverage, is the best provider for commercial daycare centers. This is because of its claim support services and high limits, which is better suited for larger operations. It is rated A (Excellent) by AM Best.
Philadelphia Insurance Companies: Best for Preschools
Philadelphia Insurance Companies (Phly) has created a policy package designed for both nonprofit and for-profit daycares. To generate revenue and work as passive outreach, many nonprofits operate preschools—and this provider is their best option because of its limits, claim services, and coverage options. Phly is owned by the global company Tokio Marine Holdings Inc., which has an AM Best rating of A++ (Superior).
American Family: Best for In-home Daycare
If you operate a daycare in your home, your homeowners will most likely not cover any losses associated with the business. However, American Family offers an endorsement for homeowners, which will cover an in-home daycare for up to six children. The provider was founded in 1927 and has the established financial stability you want in an insurance company. It has an A (Excellent) rating from AM Best.
Get a Quote from American Family
Bottom Line
While children are a blessing, watching them can be an insurance risk. Whether you have a commercial daycare or in-home childcare, daycare insurance can protect your physical property and your business assets against potential liabilities. Next Insurance is the best overall provider for childcare insurance and can give you no-obligation quotes in minutes.
