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Running a daycare is more than simply running a business. It’s also a labor of love. Families trust you with their children’s safety, social development and early learning. You and your employees have the honor (and hard work) of guiding the children in your care through some major developmental milestones.
This trust comes with a lot of responsibility, and anyone who’s been around kids knows that even in a safe, child-friendly environment, accidents can happen.
The cost of medical care, property repairs or defending against litigation can drain a daycare operator’s budget quickly. That’s why daycare liability insurance is a must, whether your business is based in your home or in another location.
Let’s look at how the right insurance policies can care for your business.
Do I need daycare liability insurance?
Joint and several liability laws are used when multiple parties are—or might be—responsible for a specific occurence, accident, or injury.
- In-home care: Say one of the toddlers in your care falls and hits a piece of furniture. She needs stitches, and the parents expect you to pay for her ER visit and surgery.
- Childcare centers: Perhaps one of your preschoolers bites a classmate hard enough to require a doctor visit, antibiotics and a tetanus shot. The bite victim’s parents sue you for medical expenses and the cost of therapy for their child’s emotional distress.
- Before-and after-school care providers: What if a bee stings a child in your care during outside playtime, and she has a severe allergic reaction? Her dad might expect you to pay for her ambulance ride and ER care.
- Camp operators: Despite your written sick-child policies, imagine if one of your campers shows up with chicken pox. Another camper catches it and is hospitalized with complications. His parents sue your business.
In these very possible situations and others like them, a daycare liability policy can help your business handle the claim and get back to work instead of taking a huge financial hit.
What does daycare liability insurance do?
A daycare liability policy is a general business liability policy tailored to the specific risks childcare businesses face. Daycare liability policies typically cover:
- Physical injuries – This coverage protects you if one of the kids in your care gets hurt. It can also cover you if a parent or guardian gets injured during pickup or dropoff.
- Personal injury claims – People who believe your business has libeled or slandered them might sue you. This could be a competing daycare who claims that you maligned them on social media, or a parent who claims that you said something damaging about their family or child to another client.
- Property damage – In addition to typical damage scenarios like fire, vandalism and water damage covered under you own property policy, a daycare liability policy may also cover situations like when you are sued because an unruly preschooler with a soccer ball and bad aim breaks a window of a neighboring business.
As a childcare provider, you’ve probably already thought of several scenarios that don’t fall into these categories. So, let’s look at other types of insurance your business may also need to be fully protected.
Homeowners insurance vs. daycare liability insurance
If you run a daycare in your home, you might assume that your homeowner’s policy covers you in case of a childcare-related accident, injury or lawsuit. While you should definitely carry homeowners insurance to protect your investment in your property, it probably won’t help you with business claims. That’s because most homeowners policies cap home-business related coverage at $2,500 for damage to your own property, with little or no liability coverage.1 We’re not kidding around – that’s it!
Your homeowners agent can tell you whether you can add an endorsement to your policy to cover business liability claims. BUT BE CAREFUL! Even with some business liability coverage, some homeowner insurance companies have limitations or restrictions when it comes to day care operations. If adding coverage to your homeowners policy is an option for you, compare the cost and inclusions of that endorsement coverage to standalone daycare liability policies before you make a decision.
Workers’ compensation vs. daycare liability insurance
Keep in mind that daycare liability policies only cover child and visitor injuries. If you have employees, their work-related injuries and illnesses need to be covered by workers’ compensation insurance. This kind of policy can protect you if:
- Your employee injures her back lifting a child, needs physical therapy and is unable to work for weeks.
- A child comes to daycare sick and infects your employee, who ends up in the hospital.
- Your employee loses wages while they’re recovering from a work-related injury or illness.
Almost every state requires employers to carry workers’ compensation coverage, though specific laws can vary. Be sure to check the local statutes and regulations in your state and city to ensure you’re properly covered.
Professional liability vs. daycare liability insurance
Professional liability insurance covers on-the-job “errors and omissions” by you and your employees. For example, if your preschool specializes in teaching kids a second language, a family might file a claim against you if their child doesn’t pick it up.
Distinct daycare professional liability policies also cover more specific hazards, like liability for your daycare pickup vehicle and child abuse claims.
What coverage does my daycare business need?
Your state may have liability coverage requirements for daycares, especially for daycare centers that are based outside the home. You can look up your state’s child care licensing rules using the U.S. Department of Health & Human Services’ Office of Child Care map.
Even if your state doesn’t legally require you to have coverage, a daycare liability policy can protect you from serious financial losses in case of an accident or a lawsuit. Having that coverage can also provide peace-of-mind so you can focus on keeping the kids in your care entertained, well-fed and safe.
In addition to a daycare liability policy to cover child, parent and other third-party injuries, property damage and libel lawsuits, you may want to add professional liability. Professional liability coverage is especially valuable if your daycare business has employees or offers academic enrichment. Some carriers combine daycare and professional liability into a single business owners’ policy at a reduced premium.
If you have employees, you will be required by your state to have workers’ compensation coverage in case they get injured, get sick or die from a work-related cause. Depending on your budget and your risk tolerance, you may also want to add an umbrella policy that amplifies the coverage provided by your other business policies.
If you transport children in a company vehicle, you will need to have automobile liability insurance.
How do I get daycare liability coverage?
Start by finding out how much coverage you need for your daycare business. That will depend on:2
- Your state’s liability insurance requirements, if any, for the kind of daycare you own
- The number of children you care for
- The ages of the children you care for
- The number of employees you have
What you pay in premiums will depend on those factors, plus:
- The coverage limits you choose
- The policy deductibles you choose
- Your business income
- Any history of claims against your daycare business
Ask if there are premium discounts available for buying multiple policies at once, like daycare liability plus professional liability. You may also get a discount if you pay your annual or semi-annual premium in a lump sum instead of paying by the month.
Though we don’t currently offer daycare liability insurance, we do offer other types of flexible small business insurance by the hour, day, or month so you can close any gaps in your coverage.
We’re here to care for you and your business, so you can focus on caring for others.