Daycare insurance is coverage for businesses in the childcare industry. Policies can cover business-owned property and liability risks that come with caring for children. Depending on coverage, annual costs of daycare insurance range from $750 to $1,350 for in-home childcare businesses to $1,000 to $2,000 for commercial daycare centers.
To get your daycare insured quickly and properly, try online broker CoverWallet. It uses technology to quickly compare multiple quotes from top carriers and find low-cost options that are right for you. Get started today by filling out a free, no-obligation application online.
Daycare Insurance Providers
Provider | Best For |
|---|---|
Daycare providers who want fast quotes for affordable liability insurance | |
Commercial daycare centers that want discounts for background screenings and safety training | |
Nonprofit childcare centers that want all their insurance policies in one package | |
Childcare providers who don’t want to fill out multiple applications to find daycare insurance | |
Owners of small daycare businesses and in-home providers who need affordable coverage |
Daycare insurance is a niche product, so owners sometimes have a hard time finding providers. For our list of top insurance providers, we looked for well-known and financially stable carriers that have a history of writing specialty coverages. We also included two online agencies that can sell insurance from multiple carriers.
CoverWallet
CoverWallet works with some of the best small business insurance companies, including Liberty Mutual, Chubb, and Progressive, to quote, bind, and issue policies online for businesses in a number of industries. Daycare 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. General liability insurance through CoverWallet starts at $468
Markel
Markel is an excellent choice for both in-home and large commercial daycare businesses with employees. It offers 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 daycare owners reduce the risk of filing claims.
Philadelphia Insurance Companies
Daycare is one of the top industries for the Philadelphia Insurance Companies (PHLY), and it offers an insurance program for nonprofit and for-profit childcare centers. The comprehensive program combines multiple coverages, including directors and officers insurance. This makes PHLY the right choice for nonprofit daycare businesses that want the convenience of having all their daycare insurance with one company.
CoverHound
CoverHound is a reliable broker that shops and compares quotes from top carriers, including Progressive Commercial, Chubb, Liberty Mutual, Nationwide, and over 40 others. This makes it an excellent choice for busy daycare 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 while getting the right coverage for your business at an affordable price.
Assure Child Care
Assure Child Care is a specialty group program that gives members a cost-effective way to get insurance, including general liability, commercial property, and workers’ compensation coverage. Essentially, 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 its own. This makes Assure Child Care the best choice for small daycare businesses and at-home providers who struggle to find affordable childcare insurance.
How Daycare Insurance Works
Daycare insurance is a group of business policies childcare 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, bodily injury, or reputational harm. Small in-home daycare businesses may pay $40 per month for general liability.
Daycare 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), giving you two types of coverage in a single policy for a reduced rate. BOPs typically cost about $750 per year for daycare centers.
Who Daycare Insurance Is Right For
Business owners who care for children almost always need insurance. In fact, most states mandate that daycare centers 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 daycare providers need a license and insurance too.
“One serious mistake that in-home daycare 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 daycare business are not covered unless you purchase general liability for your business.”
— Paul H. Cannon, Attorney, Simmons and Fletcher, P.C.
“One serious mistake that in-home daycare 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 daycare business are not covered unless you purchase general liability for your business.”Essentially, anyone whose business involves looking after other people’s children should consider childcare insurance, including:
- Religious and nonprofit daycare centers
- After-school programs
- Summer day camps
- Preschool programs
Nannies may also need childcare insurance when they are self-employed because that makes them a business owner. As business owners, they can be held liable for harm caused by their business operations. For more information on nanny insurance for self-employed daycare providers, be sure to check out our ultimate guide to nanny insurance.
Who Does Not Need Daycare Insurance
Not everyone who works with children needs daycare 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 Daycare Insurance
The different policies that make up daycare insurance cover a wide range of risks, so childcare providers have important choices to make when it comes to getting the best coverage for their needs. At a minimum, most daycare business owners need daycare liability insurance, but most should consider a BOP. Other coverages may be necessary as well.
Most Common Types of Childcare Insurance Coverages
Type of Insurance | What it Covers |
|---|---|
Third-party claims for bodily injury, property damage, and reputational harm | |
Business assets such as building, equipment, and supplies | |
Claims arising from your mistakes, omissions, or negligence while performing your work | |
Losses arising from an employee abusing a child under your care | |
Injuries, damages, and lawsuits arising from accidents involving vehicles your business uses | |
Medical bills and wage replacement for employees who suffer work-related injuries | |
Claims that exceed limits on underlying liability policies |
Different coverages are appropriate for different types of childcare businesses. An at-home daycare 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 daycare with staff will. Still, there are some policies that are common to most daycare businesses.
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 daycare businesses.
Examples of when a daycare provider might need general liability insurance include:
- A short in your microwave sparks a fire in the building you rent for your daycare
- 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. Coverage typically extends to your employees too.
Property Insurance
Property insurance covers your daycare 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.
Daycare 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 daycare providers need a separate policy to cover these kinds of accusations.
Examples of when a daycare 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 judgments against your business.
Abuse & Molestation Coverage
Unfortunately, daycare providers have to worry about accusations of sexual misconduct. Such allegations may be rare, but they are catastrophic if they occur. These accusations are covered by abuse and molestation insurance, including allegations that are meritless. 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.
Childcare 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. Some insurers may even require you to repay their costs if your employee is found guilty.
Commercial Auto Insurance
If you use a car, truck, van, or combination of vehicles for your daycare 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 daycare 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
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 daycare owners and their passengers may be unprotected when they are driving their personal vehicles for business purposes. This holds true if your employees ever drive your students in their personal vehicles. This risk is typically covered by hired and non-owned auto insurance.
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 daycare owners to have coverage even when they have just a single employee.
Some of the work hazards daycare 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 daycare 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.
Daycare Insurance Costs
Daycare insurance costs can range from about $250 per year for home-based daycare businesses to around $2,000 for commercial daycare 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.
Childcare Insurance Costs & Deductibles by Policy
Policy | Typical Premium Range | Typical Deductible | Coverage Amounts |
|---|---|---|---|
General Liability Unsurance | $250 - $650 | $0 | $1 million per claim / $2 million aggregate |
Property Insurance | $500 - $700 | $500 - $1,000 | $15,000 - $20,000 |
Professional Liability Insurance | $500 - $1,200 | $500 - $1,000 | $1 million aggregate |
Abuse & Molestation Coverage | Included with general or professional liability | $5 to $10 per child | $25,000 - $50,000 |
Commercial Auto Insurance | $800 - $3,000 | $500 - $1,000 | $100,000 - $1 million |
Commercial daycare centers tend to be larger and have more clients than at-home businesses, which usually translates into more risk and higher insurance costs. However, size isn’t everything when it comes to daycare insurance. Carriers consider a number of business characteristics and coverage details when they set premiums.
Other factors that can impact the cost of daycare insurance include:
- Revenue: Daycare 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: Daycare 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 daycare insurance costs because the insurer has to pay more if you file a claim.
— Brigida Aversa, Founder and COO of Tiny Hoppers
“Many believe that, due to the sensitive nature of the daycare business, premium rates would be a significant cost factor. In fact, it is quite the opposite. Licensed daycare 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 daycare business is dramatically reduced.”Tips on Getting Childcare Insurance
Daycare 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 childcare licensing regulations site. Both offer interactive maps that lead to state-specific information.
Additional tips for getting childcare insurance include:
1. Know & Manage Your Risk Exposures
Every business faces risks that are inherent to that business. For daycares, 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.
— Chris Orletski, President of Blankit Insurance Group
“Sexual misconduct, abuse, or molestation is probably the biggest concern a daycare 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 daycare insurance, be sure to compare premiums and policy terms, and bundle your coverages whenever possible.
3. Use an Agent Who Knows Your Industry
Daycare insurance is industry specific, which means it’s a specialty insurance. This also means daycare insurance policies can vary widely between insurers, so Orletski says daycare 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.”
Daycare Insurance Frequently Asked Questions (FAQs)
Our goal is to answer all of your questions about daycare insurance. In case you still have questions, below are answers to some of the most frequently asked questions about childcare coverage.
Can I be sued if a child is injured at my daycare?
Parents can sue daycare 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 childcare?
The main form of daycare negligence is failure to properly supervise children, but daycare 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 daycare?
Daycare 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.
Does daycare insurance cover harm caused by corporal punishment?
Some insurers do offer coverage for injuries caused by corporal in either their general or professional liability policies. However, others explicitly exclude it. Either way, you should review your policies with an insurance agent to see if corporal punishment is covered.
Bottom Line
Every childcare business, whether it’s an in-home daycare or a commercial daycare 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 daycare from a financial loss that could cause you to lose everything you’ve worked hard to build. Don’t forget to use CoverWallet to get a quick, free quote and connect you to the right insurance for your unique business. Get started today by filling out a quick online questionnaire.
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