If you are a home day care operator looking to improve and protect your business from the hazards of everyday life, this publication is for you. Some common risks your business faces include slips and falls, ingestion of toxic substances, allegations of abuse, defective playground equipment causing injuries, and more. When these risks occur, they can cost your business various financial and reputational damages, such as lawsuits, penalties, loss of customers, etc.
good news: you can mitigate these risks by taking out home daycare insurance. what is it, what types are available and how can it benefit your business? Keep scrolling for these and more ideas about home child care insurance! We’ll also answer some questions that we suspect will be the most important at the end of this resource.
what is home daycare insurance? do you need it?
Daycare insurance is a custom-made policy that covers your liability if something happens to the people in your care. In other words, it protects caregivers from the unique risks your home daycare business may face.
In most cases, it usually comes as an add-on to a homeowner’s insurance policy. That means you extend your liability coverage to the children in your care. but that’s not usually explicitly automatic, so you’ll want to check with your insurance company to confirm that your homeowners policy is all-inclusive.
So, do you need a home child care insurance policy to protect your business and those in your care? frankly, yes! As we mentioned earlier, there is no guarantee that the standard homeowners policy will cover your in-home child care. That means if your business were sued (for the reasons listed above), you’d have to look to your personal assets like savings and home to offset the charges. And you don’t want that to happen, do you?
Therefore, it’s critical that you consider home daycare insurance coverage tailored to your business of six children or fewer. however, if you have more than six children in your care, you should opt for a commercial policy, as it is more comprehensive and comes with more comprehensive coverage solutions for your daycare.
the three types of home day care insurance
When you’re in the market for home child care insurance, there are three different options you can choose from, depending on your coverage needs. these include:
- civil liability insurance
- homeowner’s insurance
- errors & omissions insurance
- Property damage. Running a daycare business well requires equipment and supplies such as furniture, computer, water, toys, etc. however, said property is not immune to damage due to natural phenomena, vandalism, falling objects, among other causes. therefore, home day care liability insurance saves you the expense of repair or replacement by covering costs when a hazard occurs.
- Personal Injury. As an operator of a family day care home, you are always at risk of reputational damage, also known as personal injury, from dissatisfied customers, ill-intentioned competitors, social network users and more. and the effects can be far-reaching, including lost clients, lawsuits, difficulty hiring and retaining top talent, etc. Fortunately, general liability insurance protects your business from unexpected mishaps due to personal injury.
- physical injury. If a child in your care is injured while playing, you will most likely be held responsible. It doesn’t matter if you were monitoring the activity or can prove the equipment was safe; you could still be held liable for damages. But that’s not a concern if you have home daycare liability insurance, since you won’t incur any out-of-pocket costs.
civil liability insurance
From the perspective of the daycare business, general liability is better known as “slip and fall” insurance. protects your business in case someone is injured within its perimeters and covers the following damages/injuries:
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It’s a natural call to want to protect your home against theft of possessions, personal liability for harm to others, property damage, among other risks. But running a daycare home provides even more reasons to opt for homeowners insurance due to the risky nature of the business.
As we mentioned earlier, some homeowners insurance policies include in-home childcare responsibilities. so you’ll be lucky if your insurer gives you that extra benefit. Otherwise, you’ll need to purchase separate homeowners insurance, which covers risks such as vandalism, theft, property damage, fire, and more. In addition, the policy also assumes liability if children or employees are injured within the perimeters of your home daycare.
errors and omissions insurance
Variously referred to as professional liability insurance or insurance for malpractice, errors & omissions (e+o) is a must-have cover if you want to run your home daycare without a hitch. the policy is helpful in protecting you or your employees against negligent claims from your customers.
as they say, to err is human, and it’s not uncommon for you (or your employee) to make a mistake or for the parent to understand your terms of service, providing grounds for legal action. so e+o insurance comes to your rescue when your business is sued, covering all defense costs.
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daycare insurance cost
Because every family child care business is unique, insurance costs also vary based on individual needs, such as preferred amount or type of coverage. But basically, you can expect to pay an annual insurance cost of between $450 and $1,350 for your home daycare business. On the other hand, if you run a commercial daycare, you may incur between $1,000 and $3,500 in annual insurance premiums.
But how do insurance companies set these numbers when setting premiums? Here are some factors regarding coverage details and business features that insurers consider when setting their rates:
The more daycare staff you have, the more likely you are to pay for coverage. That’s because workers’ compensation rates are typically partially based on payroll. Plus, employees bear an element of liability risk, so you may have to dig deeper into your pockets to pay for errors and omissions insurance.
The more revenue your home daycare business generates, the higher the premiums you’ll pay. Home day care insurance companies often assume that if your business makes more money, you have more to lose; therefore, you are more likely to be sued.
is a general rule; the higher the deductibles, the lower the insurance premium and the opposite is true. But here’s the problem; Your daycare business will have to pay more if you end up filing a claim. So while deductibles can save you money, it all depends on how often you file a claim.
Insurance companies are businesses like any other and need to maintain a healthy profit margin to continue operating. however, that is a feat they can only accomplish if their customers file fewer claims. The point is, if you have a history of filing multiple claims, you will have to pay higher premiums.
Like most other insurance products, home day care insurance comes with various coverage limits, and the higher it is, the more it will cost you. That’s because, with higher coverage limits, the insurance company has to compensate you more if you file a claim.
Frequently asked questions about home day care insurance
Is it mandatory to take out childcare insurance at home?
In a word, yes! Most states have made it mandatory for family child care businesses to carry liability insurance as a prerequisite to meeting licensing requirements. So if you have a small business with six children or less and want to operate without any legal involvement, you should opt for home daycare insurance.
what does errors and omissions insurance cover?
Errors and omissions insurance covers expenses if you or your employees are sued for carelessness or errors. For example, if a child is injured while playing because you were not interested in supervision, the policy will cover the costs of the lawsuit.
where can i buy home daycare insurance?
In-home child care policies are quite unique and are rarely offered by standard homeowners insurance providers. so you may need to look elsewhere for the best home day care insurance coverage. Some of the most trusted providers include American Family, Markel, Next Insurance, CoverWallet, Assure Child Care, and JMG Insurance Agency.
Protect your practice with home daycare insurance!
let’s be real; As a business owner, you have to take risks like accidents, theft, vandalism, property damage, workplace injuries, etc. and a home daycare is no exception. when these risks occur, it can be knocked down by damage and cease operations or pick itself up and carry on as if nothing happened. it all depends on how well you have prepared yourself for the unknown. Having adequate in-home child care coverage in place beforehand gives you peace of mind, knowing you’ll be able to get back on track should an unfortunate event occur.
Are you a parent looking for the best home daycare for your child? Or maybe you are an educator looking to set up your daycare or preschool? either way, wonderschool can help. We are a mission-driven company providing a world-class platform and resources that enable educators and care providers to run their daycare businesses efficiently and profitably while providing world-class services.
At wonderschool, we have one goal: to ensure that all children have access to the quality child care necessary for their growth. so join us today and let’s achieve this goal together!