Running a home daycare business involves supervising children, which can expose you to various risks. Accidents can happen during art projects, staff may make mistakes, and children can get injured. That's why many states require in-home daycare businesses to purchase liability insurance before obtaining a license.
As someone who is responsible for the safety of children in your care, it's crucial to have an insurance policy that can protect your business from financial losses. Even if it's not mandatory in your state, having a comprehensive home daycare business insurance package can safeguard your livelihood and enhance your reputation in the eyes of parents.
Who Needs Daycare Insurance
Daycare operations are usually regulated by the state and require a license to operate. Obtaining a license usually entails having liability insurance. To find the agency responsible for licensure, the United States Department of Health and Human Services can provide you with contact information.
If you operate any of the following, you should consider getting childcare insurance:
- Commercial daycare centers
- Home-based childcare
- Preschool programs
- Summer day camps
- Religious and nonprofit daycare centers
It's important to note that while daycare providers should consider insurance, the same may not apply to occasional teenage babysitters. However, if you're a professional nanny, it's a good idea to look into babysitting and nanny insurance.
Types of Daycare Insurance
Every daycare business is unique and has its own set of insurance requirements. The level of coverage needed for an at-home childcare provider differs from that of a commercial daycare center or a preschool based in a church. Here are some of the most common insurance policies that daycare businesses need:
General liability insurance covers legal costs and judgments related to claims of negligence against your daycare, including bodily injury, property damage, and personal or advertising injury. It also includes medical payments coverage.
Professional liability insurance covers lawsuits arising from professional negligence, such as educational enrichment that fails to produce results.
Business personal property insurance provides extra coverage for upgrades to your home, furniture, toys, and equipment used to operate your daycare business.
Business interruption insurance helps cover lost income and debts after a covered loss interrupts your business operations.
A business owner’s policy combines general liability insurance, commercial property insurance, and business interruption insurance, but may include unnecessary coverage.
Abuse and molestation insurance pays for your business’s defense and judgments in lawsuits arising from accusations of abuse or molestation, while corporal punishment insurance covers lawsuits resulting from an employee physically harming a child while reprimanding them.
[Workers’ compensation insurance] covers medical bills and lost wages for employees who become injured or ill in the course of their job duties, including those who contract COVID-19.
Commercial auto insurance is required if you offer pick-up and drop-off services or own a vehicle for business purposes, while hired and non-owned auto insurance is needed if you or your employees use personal vehicles for business activities.
Cost
The price you'll pay for insurance for your in-home daycare business depends on several factors unique to your business, such as the number of employees you have and the number of children you care for, as well as the specific coverage and limits you choose. According to Next Insurance, most daycare businesses typically pay between $56 and $78 per month for general liability insurance, but it's important to note that other coverages may be necessary for home daycares. Generally speaking, you can expect to pay anywhere between $450 and $1,350 per year for in-home daycare insurance. However, if you require commercial auto insurance, your costs will be higher.
Risk Factors That Impact Price
Insurance companies determine premiums based on evaluating risks associated with your business. When requesting a quote, the provider will ask you questions such as:
- Claims history: Have you filed a claim in the past three years?
- Overnight care: Do you provide overnight care?
- Emergency contact: For in-home centers, do you have someone who can respond immediately in case of an emergency?
- Background checks: Do you conduct background checks on your employees?
- Abuse allegations: Has your business or any of its employees ever been accused of abuse?
- Experience: How long have you been in business?
- Revenue: What was your revenue for the last year and what do you project for the current year?
Make sure to answer these questions honestly, and be prepared to answer more during the quoting process. This will help the carrier provide you with a policy that meets your specific business needs in terms of coverage and limits.
How to Choose the Best Insurance Company For You
To determine the best insurance for your daycare needs, start by assessing the unique risks associated with your business. Consider factors such as the number of children you care for, the size of your staff, and the types of services you offer.
Next, research different insurance companies and policies. Look for companies that specialize in providing insurance for daycare businesses and compare coverage options, policy limits, and deductibles. Take note of any additional coverages that may be important to your specific business needs, such as abuse and molestation coverage or workers’ compensation insurance.
Don’t forget to review the reputation of the insurance companies you’re considering. Look up customer reviews and ratings from independent third-party sources to ensure the company has a strong track record of providing quality coverage and excellent customer service.
Finally, reach out to insurance agents and brokers who specialize in daycare insurance. They can help you understand your options and provide you with personalized recommendations based on your business’s unique needs. Working with an experienced professional can save you time and help ensure you have the right coverage in place to protect your daycare business.
Best Daycare Insurance Companies
Markel Insurance
Markel Insurance is one of the best options for daycare insurance due to its robust package designed specifically for in-home daycare businesses. Their policy includes occurrence-form coverage for general liability, abuse and molestation, and accidental medical insurance. It can cover daycares with up to 18 children, and they offer free additional insureds and flexible payment options. The company provides professional liability and workers’ compensation insurance. However, if you need commercial auto insurance, Markel does not offer this coverage.
Great American Insurance Group
Great American Insurance Group provides an extensive range of daycare insurance coverages, including general liability, professional liability, and abuse or molestation coverage. Additionally, the company offers commercial auto, umbrella, inland marine, and more.
You can choose between occurrence-form or claims-made coverage. Great American has an A+ financial strength rating from AM Best, and also provides risk management services, including on-site child abuse prevention training and a smartphone app for anonymously reporting inappropriate behavior. The only downside is that the company doesn't provide an online quote or application.
Next Insurance
Next Insurance is a great option for those who need a variety of insurance policies for their daycare business. They offer a quick and easy online quote and application process, with the added convenience of receiving a live certificate of insurance that can be easily shared.
Bundling multiple policies can result in a 10% discount.
Home daycares can expect affordable premiums for general liability coverage, typically ranging between $56 and $78 per month. However, it is important to note that Next Insurance does not offer abuse or molestation coverage, which may create a gap in your policy.
CoverWallet
CoverWallet acts as a broker, meaning they work with various insurance companies to offer you the best coverage options at competitive prices. They provide easy-to-use online tools that make getting a quote simple, even for daycare businesses that may have more inherent risks than other industries.
In addition to their online quote services, CoverWallet also offers excellent policy services, including risk assessments and expert advice on what type of coverage is right for your business. They can help you choose from a range of coverage options, including general liability, property damage, and workers' compensation, to ensure that you have the coverage you need to protect your daycare.
Overall, CoverWallet is an excellent option for daycare insurance, offering multiple quotes, expert advice, and a range of coverage options to keep your business safe and protected.
Philadelphia Insurance Companies
Philadelphia Insurance Companies (PHLY) offers a policy package that caters to both nonprofit and for-profit daycares. Nonprofits that operate preschools for passive outreach and revenue can benefit from the policy package that PHLY has designed specifically for them. This policy package is equipped with great limits, claim services, and coverage options that make it a top choice for such organizations.
Cincinnati Insurance Company
Another one of the best insurance companies for daycares is the Cincinnati Insurance Company. They offer a comprehensive package of coverage options for daycare providers, including general liability, property, professional liability, and abuse or molestation coverage. The company also offers flexible payment options and excellent customer service. They have a solid financial rating and a reputation for being a reliable insurance provider.
The Hartford
The Hartford is a top-rated daycare insurance company that offers comprehensive coverage options for your daycare business. Their coverage includes general liability, professional liability, abuse and molestation coverage, and property insurance, among others.
What sets The Hartford apart is their focus on risk management and safety resources for their customers, which can help prevent incidents and reduce the likelihood of claims.
The company has a strong financial rating and a reputation for excellent customer service. They also offer customized coverage options and flexible payment plans to fit your specific needs. Overall, The Hartford is a great choice for daycare owners who want reliable and comprehensive coverage for their business.
Shopping Around
It's crucial to compare quotes from various daycare insurance providers to ensure that you get the coverage you require at a price that is reasonable for you. Each provider may offer different coverage options, limits, deductibles, and pricing, so it's essential to do your homework and compare various choices before selecting one.
Comparing quotes can assist you in finding the best coverage for your daycare at a price that is within your budget. This can help you avoid paying too much for coverage that you don't require, while also ensuring that you have sufficient protection in the event of an incident or accident. Keep in mind that the cheapest option may not always be the best fit, so make sure to compare the specifics of each policy to make an informed decision.
Considerations for Home Daycares
When it comes to home daycare insurance, it's important to be aware of certain exclusions that may be present in your policy. These endorsements can place restrictions on the number of children you can care for, as well as prohibiting adult care and certain attractive nuisances like swimming pools and trampolines. Additionally, coverage for things like abuse and molestation liability or corporal punishment liability may be limited, and there may be an annual cap on liability and medical payments coverage.
If you plan to use your vehicle for business purposes, it's also crucial to ensure that you have the proper car insurance coverage.
Given these factors, it may be worth considering a commercial policy to ensure that you and those in your care are fully protected. A commercial policy may offer more comprehensive coverage and greater peace of mind, especially if you plan to expand your daycare business in the future.
Key Takeaways for Choosing the Best Daycare Insurance
Choosing the right daycare insurance is a crucial step to ensure that you and the children in your care are adequately protected in case of an accident or incident. With the numerous options available, it's important to research and compare policies from different insurance providers to find the best coverage for your needs at a price you can afford.
By considering the pros and cons of each provider and policy, you can make an informed decision and rest easy knowing that you have taken the necessary steps to protect your business.
Whether you opt for a standard homeowner's insurance policy, a specialized daycare endorsement, or a commercial policy, it's essential to understand the exclusions and considerations of each option to make the best choice for you and your daycare.
About The Author
