Daycare insurance, also known as childcare insurance, is designed to meet the unique needs of businesses in the childcare industry, whether the business is operated out of a home or in a service center. The annual cost of daycare insurance ranges from $250 for an in-home childcare business to $2,000 for a larger daycare center.
Every childcare business is unique and therefore has specific insurance needs. What every daycare has in common is that working with children creates the potential for significant risk. If you want help navigating the various types of daycare insurance coverage that your daycare may need, reach out to the experts at Insurance321.
Who Needs Daycare Insurance
If you are in the business of caring for children, you will likely need insurance coverage. One slight exception to this general rule is the occasional teenage babysitter. However, even the babysitter can be sued, even if he or she was not negligent. At a minimum, liability coverage is wise for all childcare professionals.
Most states require that childcare businesses and nursery schools are licensed through the Department of Health and Human Services (DHHS), which requires liability insurance to obtain the license. DHHS does not require liability insurance to license a home-based daycare business. However, home policies often exclude business-related claims and will require an added endorsement to protect your business.
The U.S. Bureau of Labor Statistics projects that daycare businesses will be one of the fastest growing of all industries through 2020. Making your business more marketable can help take advantage of this growth. Insurance coverage can help set your business apart by demonstrating to your prospective clients that you are professional and trustworthy.
If you’re in need of daycare insurance, check out Insurance321. Insurance321 will help you sort through all the agents, brokers, and carriers to find daycare insurance that fits your business’s needs. Get a no-obligation quote online in minutes.
Types of Daycare Insurance Coverage
Daycare insurance can include a wide range of risk exposures and respective coverage types. This means that there are important choices that business owners will need to make to get the best coverage for their needs. At a minimum, most daycare business owners will need daycare liability insurance but there are other coverage types to consider.
Childcare Insurance Coverage Types
|General Liability||Third-party claims for bodily injury or damage to property because of your business|
|Property Insurance||Assets of your business, such as building, equipment, and supplies|
|Business Owners Policy (BOP)||Combines general liability and property insurance into one bundled policy|
|Professional Liability||Claims arising from your responsibility or negligence while performing your work|
|Abuse and Molestation Liability||Loss arising from an employee abusing a child under your care|
|Commercial Vehicle Insurance||Injury, damage and lawsuits arising from accidents involving vehicles owned by your daycare business|
|Workers Compensation||Work-related injuries, medical bills, and wage replacement for your employees|
|Umbrella Insurance||Claims that exceed limits on liability coverage|
General Liability Insurance
When working with children, accidental injuries are certain to happen and parents may sue you, whether you are negligent or not. General liability insurance covers third-party claims for bodily injury or property damage on the premises of your business. Liability claims may be your greatest financial risk, which makes this an important coverage type for daycare businesses.
According to Paul H. Cannon, Attorney, Simmons and Fletcher, P.C.:
“One serious mistake that in-home daycare operators make is assuming that their homeowner’s 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 is not covered unless you purchase general liability for your business.”
Commercial property insurance covers assets of your daycare business other than your commercial vehicle(s). Assets covered may include your building, equipment, and supplies. You will choose to insure either at current value or replacement cost. Current value replaces at market value and has lower premiums, whereas replacement cost replaces with new property but has higher premiums.
Business Owners Policy
A business owners policy (BOP) will combine the two primary insurance coverage types — your daycare liability insurance and property insurance — into one bundled package. Combining two major policies types together is lower in cost than having two separate policies on your daycare business. However, you may need to add other coverage types to the policy.
Professional Liability Insurance
Professional liability covers you and your employees for loss or damage arising out negligence or you or your staff’s indifference while performing your work. Professional liability insurance is separate liability coverage than general liability or personal liability and therefore may not be included in a business owners’ policy, either.
Abuse & Molestation Liability
When you have employees and you work with children, you need protection against the biggest potential threat to your business, which is an employee abusing a child under your care. Sometimes abuse and molestation liability coverage is included in professional liability insurance, but you should make sure that your daycare business has this coverage.
Commercial Vehicle Insurance
If your daycare business owns a vehicle such as a car, truck, van, or combination of vehicles, and one of your vehicles is involved in an accident, commercial vehicle insurance will cover you for repairs and lawsuits. This insurance can also cover you for damage caused by an uninsured driver. Coverage works similar to personal auto policies.
Most states require workers compensation coverage when you have employees. Working in a daycare, employees may frequently face several work hazards, such as wet floors, stairways, biting children, and severe viruses or bacteria. A business owners’ policy may not include workers comp, which covers work-related injuries, medical bills, wage replacement and more for your employees.
Umbrella insurance provides coverage above the limits of your liability insurance. A common way insurance claims can rise above your general liability limits is from a lawsuit and related expenses. For example, if you have a general liability limit of $2 million and your legal fees are $3 million, umbrella insurance can cover the $1 million excess.
Daycare Insurance Cost
The cost of daycare insurance can range in annual premium from about $250 for a home daycare business needing liability coverage to $2,000 or more for larger daycare centers that need a business owners’ policy, commercial vehicle insurance, and workers compensation to cover third-party liability, business assets, commercial vehicles, and employees.
Cost of Childcare Insurance
|General Liability Insurance|
|Business Owners’ Policy (BOP)|
|Abuse & Molestation Insurance|
|Commercial Vehicle Insurance|
Most in-home daycare businesses can get insurance coverage for annual premiums between $250 and $500 because their primary need is general liability. Annual premiums for larger daycare centers will average $1,000 to $2,000 because they need a business owners’ policy, abuse and molestation coverage, workers’ compensation, and possibly commercial vehicle and umbrella insurance.
According to 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 going operations, the level of risk associated with the daycare business is dramatically reduced.”
At a minimum, the primary daycare insurance coverage needed is general liability. If you need to insure a building and contents in it, you’ll need property insurance coverage as well. In this case, you are wise to package the two policies into one business owners’ policy. Also, be sure that abuse and molestation coverage is included in your policy.
How to Buy Daycare Insurance Coverage
Insurance coverage requirements for daycare businesses will vary by state. Two good resources for learning about licensing and insurance requirements in your state are ChildCareAware.org and the DHHS child care licensing regulations site, where you can get information specific to your state, as well as contact information for your state child care licensing office.
Here are the documents and information to have ready before shopping for childcare insurance:
- Business contact information
- Number of employees
- Number and type of vehicles used for the business
- If and how you transport children
- Your home liability insurance, if a home-based business
- Activities children engage in daily (e.g. outdoor play)
- Claims history (at least the past 3 years)
- Insurance requirements (coverage types, limits) to be licensed in your state
- Security protections, policies, and procedures
Here are three of the most important things to remember when buying daycare insurance:
1. Know Your Risk Exposures
Every business has risks that are inherent to that business. In the daycare business, some of the biggest risks that need to be covered include injuries to the children under your care and your employees. A bigger potential threat is claims and costs arising from abuse or molestation to a child by one of your employees.
2. Look for Value, Not Price
You don’t want to be underinsured, nor do you want to buy more insurance than you need. The cheapest policies with minimal coverage limits will not likely be the best policies for your business. Paying too much or buying unnecessary coverage types is not good for your financial bottom line. When possible, bundle your coverages into one package.
3. Use an Agent or Broker That Knows Daycare Business
Daycare liability insurance is industry-specific, which means it’s a specialty type of insurance (unlike standard policies). When shopping for an insurance policy, be sure to seek an agent or broker that understands your business. A knowledgeable insurance agent or broker can also help you buy the right coverage types and the ideal limits for your particular risk exposure.
According to Chris Orletski, President, Blankit Insurance Group:
“The best advice I can give to daycare owners/operators is to make sure they have an experienced insurance expert to guide them through the exposures to stay protected. Generally, daycare incidents can lead to severe consequences because of the nature of the business (dealing with children). A standard BOP is not going to be sufficient enough to cover the largest exposures. Sexual misconduct, abuse, or molestation is probably the biggest concern a daycare faces, especially if employing others. Extensive background checks and drug screening is just the beginning. Proper procedures, training, and reporting must be maintained in order to comply with regulatory agencies.”
Where to Get Daycare Insurance Quotes
There are two primary sources of obtaining daycare insurance and these sources are insurance agents and brokers. You’ll need to get multiple insurance quotes before making a wise decision on coverage and choosing the ideal insurance company.
1. Insurance Agents
When searching for daycare or at home childcare insurance through an agent, you are typically dealing directly with one insurance company. This means you’ll need to do some shopping. We recommend getting quotes through at least three different agents representing different insurance companies. That will give you the best sense of what deals and coverage are available to your business.
2. Insurance Brokers
Insurance brokers represent multiple insurance companies, which means they can help you find the best insurance coverage for your daycare business. They do this by searching the marketplace for the best value and for top-rated agencies with special experience in the childcare industry.
Bottom Line on Daycare Insurance Coverage
Every daycare business, whether it’s a home daycare business or a full-service daycare center, will need at least some form of insurance coverage. Even if you don’t have a building or valuable business assets to cover, you work with children, which opens up many potential liabilities. If you have a building and employees, coverage needs will expand.
Insurance321 will take your daycare’s needs into consideration when shopping quotes from multiple carriers to find the right coverage for you. Fill out their short online form to get a free, no-obligation quote.