Daycare insurance, also called childcare insurance, is designed to meet the unique needs of businesses in the childcare industry, whether they offer in-home care or run a commercial daycare center. Depending on coverage, annual costs of daycare insurance range from $250 – $800 for in-home childcare businesses to $400 – $2,000 for commercial daycare centers.
The experts at Insurance321 can evaluate your specific business risks and connect you to the right daycare insurance provider for your particular needs. They offer a simple online application that returns quotes in just minutes.
Day Care Insurance Providers
Day care insurance is a niche product, so day care owners sometimes have a hard time finding providers. For our list of top day care insurance providers, we looked for well-known and financially stable carriers with a history of writing specialty coverages. We also included two online agencies that can sell insurance from multiple carriers.
Top Day Care Insurance Providers
|CoverWallet||Day care providers who want fast quotes for affordable liability insurance|
|Markel||Day care owners who want discounts for background screenings and safety training|
|Philadelphia Insurance Companies||Day care providers who want all their insurance policies in one package|
|Insurance321||Child care providers who don’t want to fill out multiple applications to find day care insurance|
|Assure Child Care||Owners of small day care businesses and in-home providers who need affordable coverage|
CoverWallet is an online broker, which means they partner with multiple carriers to get business owners the coverage they need. They work with some of the best business insurance companies, including Liberty Mutual, Chubb, and Progressive, to quote, bind, and issue policies online for businesses in a number of industries.
Day care providers who want fast quotes should consider working with CoverWallet. Not only is the CoverWallet application easy to complete; it also returns quotes in just seconds. Business owners who use CoverWallet often get proposals from multiple carriers, which lets them compare offers from a single application.
Markel is a specialty insurer that offers day care insurance for both in-home child care providers and larger commercial centers. They offer up to $3 million in coverage on both professional liability and abuse and molestation insurance, plus an umbrella policy that provides up to $10 million in additional liability coverage.
In addition to these high coverage limits, Markel partners with employee screening services, sexual misconduct risk management training programs, and safe driving education providers that can help day care owners reduce the risk of filing claims. Caregivers can get discounts on all of these services, making Markel ideal for business owners who want to reduce claims and save money.
Philadelphia Insurance Companies
Philadelphia Insurance Companies (PHLY) is a specialty insurer that writes property and liability insurance for niche industries through local agents. Day care is one of their top industries, and the company has an insurance program that is ideal for nonprofit and for-profit child care centers.
PHLY’s comprehensive child care center program combines multiple coverages, including general liability, property, commercial auto, and professional liability insurance. This makes PHLY the right choice for larger businesses that want the convenience of having all their day care insurance with one company.
Insurance321 is an insurance company that matches child care providers with the insurers who can offer them coverage, whether they operate a home-based business or a large commercial day care. Day care providers who use Insurance321 only have to supply their information once, and the company’s technology connects them with the right carrier for their individual needs.
Insurance321 is the best choice for busy day care owners who don’t have time to comparison shop. The company does most of the legwork so you can focus on the children in your care. Using Insurance321, you can get coverage in just a few easy steps and get quotes in as fast as four minutes.
Assure Child Care
Assure Child Care is a specialty group program that allows members to get day care insurance policies, including general liability, commercial property, and workers’ compensation coverage.
Specialty programs are often a cost-effective way for business owners in niche industries to get coverage. Essentially, the Assure Child Care members band together to buy insurance, allowing insurers to charge a lower rate than if each individual business owner applied for coverage on their own. This makes Assure Child Care the best choice for small day care businesses and at-home providers who struggle to find affordable child care insurance.
How Day Care Insurance Works
Day care insurance is a group of business policies child care providers buy to protect their assets. Each policy protects against a different risk. For instance, general liability insurance covers legal fees if a third-party sues for property damage or bodily harm. Small in-home day care businesses may pay $250 per year for general liability.
Day care providers usually need more than one policy to be fully insured. The two coverages they most often need are general liability and commercial property insurance. Many carriers offer these fundamental coverages in a business owner’s policy (BOP) that bundles multiple types of coverage in a single policy for a reduced rate. BOPs typically cost about $750 per year for day care centers.
Who Day Care Insurance Is Right For
Business owners who care for children almost always need insurance. Most states require day care providers get a Department of Health and Human Services (DHHS) license, and that requires liability insurance. Depending on their state and the number of children in their care, some home-based day cares need a license and insurance, too.
“One serious mistake that in-home day care operators make is assuming their homeowners insurance will cover them for liability if one of the children is injured. All homeowners insurance policies contain a business exclusion clause that excludes business activities on the insured property. Thus, injuries related to your in-home day care business are not covered unless you purchase general liability for your business.” – Paul H. Cannon, Attorney, Simmons and Fletcher, P.C.
Nannies may also need child care insurance when they are self-employed because that makes them a business owner. As business owners, they can be held liable for harm that results from their business operations. For more information on nanny insurance for self-employed day care providers, be sure to check out our ultimate guide to nanny insurance.
Who Does Not Need Day Care Insurance
Not everyone who works with children needs day care insurance. For instance, the occasional teenage babysitter probably doesn’t need coverage. Even though they can be sued, teenagers seldom have the resources that make them a target for litigation.
Types of Day Care Insurance
The different policies that make up day care insurance cover a wide range of risks, so child care providers have important choices to make when it comes to getting the best coverage for their needs. At a minimum, most day care business owners need day care liability insurance, but most should consider a business owners policy (BOP). Other coverages may be necessary as well.
Most Common Types of Child Care Insurance Coverages
|Type of Insurance||What it Covers|
|General liability insurance||Third-party claims for bodily injury, property damage, and reputational harm|
|Property insurance||Business assets such as building, equipment, and supplies|
|Professional liability insurance||Claims arising from your mistakes, omissions, or negligence while performing your work|
|Abuse and molestation coverage||Losses arising from an employee abusing a child under your care|
|Commercial auto insurance||Injuries, damages, and lawsuits arising from accidents involving vehicles your business uses|
|Workers’ compensation insurance||Medical bills and wage replacement for employees who suffer work-related injuries|
|Umbrella insurance||Claims that exceed limits on underlying liability policies|
Different coverages are appropriate for different types of child care businesses. An at-home day care provider needs some property insurance, but not as much as a large commercial center. Similarly, a one-person operation won’t need workers’ compensation, but a day care with staff will. Still, there are some policies that are common to most day care businesses.
Some common types of day care insurance policies include:
General Liability Insurance
General liability insurance covers third-party claims for bodily injury, property damage, and reputational harm. These types of liability claims may be your greatest financial risk, which makes general liability an important policy for day care businesses.
Examples of when a day care provider might need general liability insurance include:
- A short in your microwave sparks a fire in the building you rent for your day care
- A child loses their two front teeth falling off your teeter-totter
- A competitor claims you defamed them on your business’ social media page
If your business sees a claim like one of these, general liability typically covers your legal costs. Many policies also pay for an injured third party’s medical bills or property repairs.
Property insurance covers your day care business’ assets, including your building, equipment, and supplies. You can insure your business property for either its actual cash value or replacement cost. In a property claim, actual cash value coverage deducts depreciation from the payout, while replacement cost coverage pays what it costs to repair the item.
Day care providers who rent their business spaces can get property insurance that only covers their equipment and supplies. Any damage they cause to the physical structure is typically covered by general liability.
Professional Liability Insurance
Professional liability, also called errors and omissions insurance, covers the cost of your legal defense if you or your staff are accused of causing harm while providing professional services. Professional errors, omissions, and negligence aren’t covered by general liability, so day care providers need a separate policy to cover these kinds of accusations.
Examples of when a day care provider might need professional liability insurance include:
- A parent accusing your assistant of serving peanuts to their severely allergic child
- A parent claiming you failed to teach their toddler how to read as promised
- A parent alleging you taught them a new swaddling technique that harmed their infant
In claims like these, your professional liability insurance typically pays for legal bills, court costs, and settlements or judgements against your business.
Abuse & Molestation Coverage
Unfortunately, day care providers have to worry about accusations of sexual misconduct. Such allegations may be rare, but they are catastrophic if they occur, which is why day care providers need abuse and molestation coverage. Sometimes this coverage is included in either your professional or general liability insurance, but standalone policies are also available for business owners who want to ensure adequate coverage.
Child care businesses get abuse and molestation insurance to cover their business’ legal defense costs if one of their employees is accused of sexual misconduct. Defense costs are typically paid even when you are found liable or negligent in supervising the accused employee. However, abuse and molestation coverage seldom extends to the perpetrator in an intentional act.
Commercial Auto Insurance
If you use a car, truck, van, or combination of vehicles for your day care business, then you need commercial auto insurance to cover damages and lawsuits in case of an accident. Most states require business owners to carry at least liability for damages they cause others, but day care providers may want to add other coverages.
In addition to liability insurance to cover other motorists’ damages, commercial auto coverages include:
- Medical payments: Pays for injuries sustained by you and your passengers.
- Uninsured and underinsured motorist: Pays medical and repair bills if the other driver is at fault but doesn’t have adequate coverage.
- Collision: Pays for damage to your car caused by an accident.
- Comprehensive: Pays for damage to your car caused by events other than an accident.
Day care providers who drive their personal vehicle for business purposes may also need commercial auto insurance. Personal auto insurance typically excludes any business-related driving, so day care owners and their passengers may be unprotected when they are driving their personal vehicles for business purposes.
Workers’ Compensation Insurance
Workers’ compensation insurance covers the costs associated with employees’ work-related injuries and illness, such as medical bills and lost wages. Most states require day care owners to have coverage even when they have just a single employee.
Some of the work hazards day care employees face include:
- Slip and falls on wet floors, playground equipment, and toys
- Bites from children
- Viruses or bacteria
Workers’ compensation insurance is important for business owners who have employees because neither professional nor general liability covers employees’ injuries, and you can’t add workers’ comp to a BOP.
Umbrella Liability Insurance
Umbrella liability insurance provides additional coverage when claims exceed the limits of underlying liability policies, including general liability and commercial auto insurance. Legal fees can easily exceed coverage limits, and one liability policy can’t make up the difference for another. Umbrella insurance picks up where your other liability policy falls short.
Examples of when a day care owner may want umbrella insurance include:
- Fear of large liability lawsuits: If a business owner has a general liability limit of $200,000 but is sued for $500,000, an umbrella policy kicks in to pay the remaining $300,000.
- Caring for children from high net worth families: Families with more financial resources may be more likely to sue if things go wrong.
- Renting a larger space: Commercial landlords may require higher liability limits, and umbrella insurance usually satisfies their requirements.
- Hiring additional staff: Umbrella insurance can extend the limits on the portion of worker’s comp that covers employee lawsuits.
Umbrella insurance can increase the limits on multiple underlying policies, and it’s often a more cost-effective way to increase the limits on your other liability insurance policies.
Day Care Insurance Costs
Day care insurance costs can range from about $250 per year for home-based day care businesses to around $2,000 for commercial day care centers. How much your particular business spends depends largely on the number of policies you purchase, the amount of coverage you select, and the deductibles you pick.
Child Care Insurance Costs & Deductibles by Policy
|General liability insurance|
|Professional liability insurance|
|Abuse & molestation coverage|
|Commercial auto insurance|
Commercial day care centers tend to be larger and have more clients then at-home businesses, which usually translates into more risk and higher insurance costs. However, size isn’t everything when it comes to day care insurance. Carriers consider a number of business characteristics and coverage details when they set premiums.
Other factors that can impact the cost of day care insurance include:
- Revenue: Day care businesses that earn more money often pay higher premiums because insurers assume they have more to lose and may be more likely to get sued.
- Employees: Workers’ compensation insurance rates are based partially on payroll, so more staff often means you pay more for coverage. Employees also increase your liability risk, so you may pay more for general and professional liability insurance.
- Claims history: Insurers need to cover the possibility of paying a claim, so businesses that have a history of filing multiple claims usually pay higher premiums.
- Deductibles: Day care providers can opt for a higher deductible to lower their premium, but it means they pay more if they end up filing a claim.
- Coverage limits: Choosing higher coverage limits usually increases your day care insurance costs because the insurer has to pay more if you file a claim.
According to Brigida Aversa, Founder and COO of Tiny Hoppers:
“Many believe that, due to the sensitive nature of the day care business, premium rates would be a significant cost factor. In fact, it is quite the opposite. Licensed day care centers are heavily regulated and thus must comply with very stringent requirements from multiple government regulatory bodies. Due to such scrutiny that is imposed on not only the initial construction of the center but also on the ongoing operations, the level of risk associated with the day care business is dramatically reduced.”
Tips on Getting Child Care Insurance
Day care insurance requirements vary by state. You can find the details for your state and get contact information for the licensing office from either ChildCareAware.org or the DHHS child care licensing regulations site. Both offer interactive maps that lead to state-specific information.
Additional tips for getting child care insurance include:
1. Know & Manage Your Risk Exposures
Every business faces risks that are inherent to that business. For day cares, some of the biggest risks that need to be covered stem from working with children. Injuries to the children under your care are upsetting on their own, but they can also generate expensive lawsuits and ruin your reputation. The injuries and cost are even worse when your employee is responsible for causing harm.
According to Chris Orletski, President of Blankit Insurance Group:
“Sexual misconduct, abuse, or molestation is probably the biggest concern a day care faces, especially if employing others. Extensive background checks and drug screening are just the beginning. Proper procedures, training, and reporting must be maintained in order to comply with regulatory agencies.”
2. Look for Value, Not Price
You don’t want to pay too much for insurance, but you also don’t want to be underinsured. Paying too much or buying unnecessary coverage is not good for your financial bottom line, but neither is getting cheap insurance with insufficient coverage for your business. When you’re shopping for day care insurance, be sure to compare premiums and policy terms, and bundle your coverages whenever possible.
3. Use an Agent Who Knows Your Industry
Day care insurance is industry specific, which means it’s a specialty insurance. This also means day care insurance policies can vary widely between insurers, so Orletski says day care owners need “an experienced insurance expert to guide them through the exposures to stay protected. A standard BOP is not going to be sufficient enough to cover the largest exposures.”
Day Care Insurance Frequently Asked Questions (FAQs)
We hope that this article has answered any questions you have about day care insurance. If you still have questions, below are some of the most frequently asked questions about child care coverage. If you still don’t see answers to your question, be sure to visit our forum or post it in the comments section below.
Can I be sued if a child’s injured at my daycare?
Parents can sue day care providers for their child’s injuries, especially if they believe the provider failed to properly supervise their child. For example, parents might claim their child’s injury was the result of your failure to hire sufficient staff for the number of children in your program or if the injury was foreseeable and preventable.
What is negligence in child care?
The main form of day care negligence is failure to properly supervise children, but day care providers can also be sued for failing to attend to dietary needs, failing to provide safe premises, and failing to properly screen employees.
Can liability waivers protect my day care?
Day care liability waivers are typically unenforceable because business owners can’t waive their liability for injuries that are the result of their own negligence. Moreover, parents can’t waive a child’s right to sue. However, you may want to still use liability waivers because they can discourage frivolous lawsuits.
Every child care business, whether it’s an in-home day care or a commercial day care center, needs at least some business insurance. Even if you don’t own the building or have valuable business assets to cover, your work with children creates potential liabilities and it’s important to protect your business if claims arise.
Purchasing small business insurance is a relatively inexpensive way to protect your day care from a financial loss that could cause you to lose everything you’ve worked hard to build. The experts at Insurance321 can connect you to the right insurance for your unique business and can get you a quote in as little as four minutes.