FAQ

How much is liability insurance for a daycare

Policies can cover the property and liability risks involved in caring for children. Depending on coverage, annual daycare insurance costs range from $450 to $1,350 for family child care businesses and $1,000 to $3,500 for commercial daycares.

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Reading: How much is liability insurance for a daycare

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how daycare insurance works

There is no single policy that provides insurance for all the potential risks associated with owning and operating a day care center. In order to have insurance coverage that protects themselves and their assets, child care providers often need to purchase multiple commercial insurance policies. Each policy protects against a different risk. the two coverages they most often need are general liability and commercial property insurance.

Many companies offer these essential coverages in a business owner’s policy (bop), giving you two types of coverage in one policy for one low rate. bops typically cost about $750 a year for day care centers.

who is daycare insurance suitable for

Business owners who care for children almost always need insurance. many states require child care insurance for commercial day care centers and group homes for children and adults, as well as for:

  • religious and non-profit day care centers
  • before and after school programs
  • summer camps
  • preschool programs
  • Depending on your state and the number of children in your care, some family child care providers also need a business license and insurance. You can find contact information for the state agency in charge of licensing the US Department of Health and Human Services.

    Tip: Home insurance typically excludes business activities, so family child care providers should obtain a business endorsement on their homeowner’s policy or bop to protect their assets.

    The only exception to the guideline that most child care providers need daycare insurance is the occasional teen babysitter. Even though they can be sued, teens rarely have the resources that make them a target of litigation. this is different from professional nannies, who are sometimes considered small business owners and may need nanny insurance.

    daycare insurance costs

    Daycare insurance costs can range from around $450 per year for home daycare businesses to around $2,000 for commercial daycares. 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 choose.

    child care insurance costs & policy deductibles

    Commercial daycares tend to be larger and have more customers than home-based businesses, which generally translates to more risks and higher insurance costs. however, size isn’t everything when it comes to daycare insurance. Providers consider various business features and coverage details when setting premiums, including:

    • income: Day care centers that make more money often pay higher premiums because insurers assume they have more to lose and are more likely to sue them.
    • employees: Workers’ compensation insurance rates are partially based on payroll, so more staff often means you pay more for coverage. Employees also increase your liability risk, so you may pay more for professional and general liability insurance.
    • claims history: Insurers must cover the possibility of paying a claim, so companies that have a history of submitting multiple claims tend to pay higher premiums.
    • deductibles: Daycare providers can opt for a higher deductible to lower your premium, but that means they pay more if they end up filing a claim.
    • Coverage Limits – Choosing higher coverage limits typically increases your daycare insurance costs because the insurer has to pay more if you file a claim.
    • types of daycare insurance

      Different coverages are appropriate for different types of child care businesses. an in-home child care provider needs property insurance, but not as much as a large shopping mall. Similarly, a one-person operation won’t need workers’ compensation, but a staffed daycare will. Below are some policies that are common to most day care centers.

      most common childcare insurance policies

      general liability insurance

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      general liability insurance covers third-party claims for bodily injury, property damage, and reputational damage, such as:

      • a short circuit in his microwave causes a fire in the building he rents for his daycare
      • A boy loses his two front teeth when he falls off his seesaw
      • competitor claims you defamed them on your company’s social media page
      • These types of liability claims may be your biggest financial risk, making general liability critical coverage for day care centers. If your business sees a claim like one of these, general liability typically covers your legal costs and may pay for medical bills or property repairs for the injured third party. the coverage is usually extended to damage the cause of your employees as well.

        commercial property insurance

        Business property insurance covers the assets of your day care business, including your building, equipment, and supplies. You can insure your business property for its actual cash value or replacement cost. In a property claim, actual cash value coverage deducts depreciation from the payment, while replacement cost coverage pays what it costs to repair the item, up to the insured limit.

        Daycare providers who rent out their commercial space can obtain property insurance that only covers their equipment and supplies. any damage they cause to the physical structure is usually covered under general liability.

        professional civil liability insurance

        Professional liability insurance, also called errors and omissions, covers the cost of your legal defense if you or your staff are accused of causing harm while providing professional services. For example, a professional liability policy often covers parents who accuse you or your assistant of:

        • serving peanuts to a child with a severe allergy
        • not teaching a young child to read as promised
        • teach parents a new diapering technique that harms their babies
        • Because claims like these involve your expertise, they fall under professional liability insurance, which typically pays for legal bills, court costs, and settlements or judgments against your company.

          abuse & sexual abuse coverage

          Unfortunately, daycare providers have to worry about allegations of sexual misconduct. such accusations may be rare, but they are catastrophic if they occur. Abuse and harassment insurance may cover these accusations, and some also cover corporal punishment, even if they are without merit. Sometimes this coverage is included in your general or professional liability insurance, but stand-alone policies are also available for business owners who want to ensure adequate coverage.

          Child care companies obtain abuse and abuse insurance to cover their company’s legal defense costs if one of their employees is accused of sexual misconduct. defense costs are generally paid even if you are found liable or negligent in supervising the accused employee. however, coverage rarely extends to the perpetrator in an intentional act. Some insurers may even require you to pay their costs if your employee is found guilty.

          commercial auto insurance

          You may need commercial auto insurance if you use a car, truck, van, or combination of vehicles for your daycare business to cover damages and claims in the event of an accident. Most states require business owners to at least take responsibility for damages they cause to others, but daycare providers may want to add other coverages, such as:

          • Medical Payments – Pays for injuries sustained by you and your passengers
          • Uninsured/Underinsured Driver – Pays repair and medical bills if the other driver is at fault but does not 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
          • Day care providers who drive their personal vehicles for business may also need commercial auto insurance. Most personal auto insurance excludes any business-related driving, so daycare owners and their passengers may be unprotected when driving their students in their personal vehicles.

            workers compensation insurance

            Workers’ compensation insurance covers costs associated with employee work-related injuries and illnesses, such as medical bills and lost wages. Most states require daycare owners to have coverage as soon as they hire part-time staff who may be injured by:

            • slip on wet floors
            • lifting children
            • tripping over playground equipment
            • Workers’ compensation insurance is important for business owners who have employees because neither professional nor general liability covers employee injuries, and you can’t add workers’ compensation to a bop. Also, in most states, workers’ compensation covers your legal fees if the injured employee decides to sue.

              accident insurance

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              While not strictly business insurance, accident insurance can be an important part of a daycare’s protection. the policies pay a specific benefit to help pay for medical expenses after a child is injured under her supervision. daycare owners typically need two coverages:

              • accidental medical expenses (ame) – pays costs like hospital bills, emergency room costs, and ambulance services
              • accidental death and dismemberment (ad&d) – Pays a fixed benefit amount if a child loses a limb or dies as a result of a covered accident
              • it can be purchased as primary or additional coverage. As primary coverage, AME pays the costs of the injured party regardless of any other health insurance that may apply. Excess coverage only pays for costs in excess of the injured party’s health insurance.

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                general liability insurance

                general liability insurance provides additional coverage when claims exceed the limits of the underlying liability policies, including commercial auto and general liability insurance. legal fees can easily exceed coverage limits on liability policies, and one liability policy may not make up the difference from another. umbrella insurance picks up where your other liability policy falls short.

                Examples of when a daycare owner may want umbrella insurance include:

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