Finding the Right Day Care Insurance
(Because kids will be kids, and accidents happen.)
The daycare industry continues to grow these days as more and more families move to become two-income households. And whether it’s a modest in-home daycare or a mega-care center with a bunch of rooms and a fine motor skills gymnasium, it needs to be protected.
Especially when it involves something as big as other people’s little ones — not to mention your livelihood, as well.
What Is Daycare Insurance?
Daycare insurance is a specific type of business insurance that was designed to meet the unique needs of childcare businesses. It provides business owners with much-needed daycare liability insurance coverage as well as business property coverage.
Many policies come with a set of coverage options that allow business owners to build an insurance policy that caters specifically to their daycare’s unique needs.
Who Needs Daycare Insurance?
Whether you operate your daycare business out of your home or a location far from it, you’ll really want to think long and hard about getting daycare insurance. In many cases, in fact, coverage is required.
Childcare centers and nursery schools are required to carry daycare liability insurance in order to be licensed by the Department of Health and Human Services (DHHS), and most states require licensure in order for a daycare business to legally operate.
While the DHHS has strict guidelines that your business must adhere to, your insurance company may have even stronger requirements that will affect your daycare insurance costs. These requirements are put in place to limit your exposure to liability lawsuits.
The DHHS does not require liability insurance to license home-based daycare businesses. However, you may be required by your homeowners insurance policy to carry a business insurance policy or to purchase specific endorsements to protect your business.
Do not expect that your home policy will cover you for bodily injury or property damage stemming from your home business.
Your insurer may even refuse to renew your policy if they discover that you have been running a business out of your home without home daycare insurance.
Daycare Business Insurance Offers Liability Protection
We live in a quick-to-sue society. There are many instances that may arise where your daycare business may face a liability lawsuit. Even if the charges are dropped, the ensuing legal defense fees can be quite expensive.
Liability insurance provides coverage for any court costs and legal fees associated with any covered event.
- General liability: This coverage is necessary for any business that welcomes the public onto its property. It provides coverage for property damage or injuries suffered by third-parties while they are on your property. This is particularly important when dealing with children, as they have a tendency to get injured easily. In most cases, the injuries will be minor, but if an injury is severe enough to require medical attention, your facility may be held liable for the expenses.
- Professional liability: This insurance covers your teachers and childcare workers. If your business is sued because a member of your staff has shown negligence to the children’s needs and safety, your business can be sued. Lawsuits can spring from mental, physical, or emotional abuse of the children.
- Commercial auto liability: This is required if your daycare business has company owned vehicles that are used to transport children to and from schools.
- Non-owned or for-hire auto liability: If you, or any of your workers, drive children in privately owned vehicles for field trips or other outings, your business can be held liable for injuries or property damage if the driver is in an accident. This coverage protects privately owned vehicles when they are being used for company business.
- Corporal punishment liability: If one of your employees strikes a child or is accused of administering corporal punishment, your business can be held liable. This insurance option provides financial protection if you face a claim.
- Abuse and molestation liability: If an employee of your daycare turns out to be sexually or otherwise abusive, your business can be liable for extremely expensive fines and medical payments. This insurance coverage will protect your business from severe financial losses.
- Umbrella liability protection: This coverage provides additional liability protection beyond the limits of your insurance policy’s liability limits. Larger daycare facilities may benefit from this added coverage.
Daycare Business Insurance Offers Property Insurance
Daycare business operations often invest a lot of capital into equipment to keep the children entertained during the day. A daycare insurance policy can provide you with compensation if your business property is lost or damaged.
Coverage needs are slightly different for those that run their business in-home versus out.
- Building coverage: This provides coverage for damages to the structure of the building in which your business is housed. It provides compensation for damages caused by fire, severe weather, falling objects, and property crimes. Additional insurance may be necessary for damages caused by floods and earthquakes.
- If you rent your business space, you may not need this insurance coverage.
- If you are working out of your home and you have a dedicated space for your daycare operation, you may need to add a small rider to your homeowners insurance policy.
- If you own a daycare building, you will want to be certain that you protect your investment with this insurance.
- Contents coverage: This provides coverage for damages to indoor items you use for childcare purposes, like: cribs, toys, books, sound systems, and electronics. If any of your business property is lost or damaged by fire, extreme weather, vandalism, or theft, you may be able to receive reimbursement for your loss.
- Outdoor equipment coverage: Most daycare establishments include outdoor equipment like swing sets, sandboxes, and sports equipment. In many cases coverage for loss or damage to this property is included in your contents coverage, but some insurers require you to purchase a separate endorsement for outdoor equipment.
Daycare Insurance Providers Offer Additional Coverage
Daycare insurance providers offer other insurance options that may be beneficial to your childcare business; like:
- Field trip insurance: This provides liability and property damage coverage while you are providing childcare services off-site.
- Special events liability coverage: If your facility hosts a special event like a holiday party, a fundraiser, or a pageant, this one-time insurance policy can provide liability protection during the event.
- Lost income insurance: If your facility is forced to temporally close its doors after a covered incident, this insurance will provide a continuation of income so that you can continue paying employee salaries and monthly expenses until your business is able to reopen.
- Workers compensation: This provides medical coverage for your employees if they are injured on the job. Every state has its own laws when it comes to workers compensation insurance, so make sure your daycare business is compliant. Many daycare insurance companies allow you to purchase this coverage as an addendum to your policy.
Adding options to your policy often increases the cost only marginally, and you can benefit from the added protection.
Learn More About Daycare Insurance
As you’re starting your daycare, make sure you know what the demands are in your area. A little market research will go a long way, and will help you understand what kind of daycare would be most profitable.
After you’ve determined what the structure of your business is and how many children (and of what age) you want to take in, it’s time to consider coverage.
When you apply for permits and register your childcare business with your state government, you’ll pay a tax to get unemployment insurance. However, getting licensed and acquiring permits isn’t the end of your journey. Finding the right coverage that meets your needs and fits in your budget is also important.
It’s a good idea to contact your State Insurance Commissions office for general overview information on what you’ll need to carry. Then it’s time to contact an independent insurance agent from our network.