Daycare Insurance: Coverage, Costs & Top Providers
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.
To secure your daycare quickly and properly, try an online broker like coverwallet. uses technology to compare multiple quotes from top carriers quickly and find low-cost options that are right for you. Get started today by completing a free, no-obligation online application.
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 nonprofit daycares
- before and after school programs
- summer camps
- preschool programs
Depending on the state and the number of children in their care, some family day 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 day care 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 ability to pay one claim, so companies with a history of filing multiple claims typically pay higher premiums.
- deductibles – Daycare providers may choose a deductible higher to lower your premium, but that means they’ll pay more if they stick around until you file a claim.
- Coverage Limits: Choosing higher coverage limits generally increases the costs of your daycare insurance 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 child care insurance policies
general liability insurance
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 from his seesaw
- says the competition you defamed them on your business’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. coverage is generally extended to cause damage to 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 business spaces can obtain property insurance that only covers their equipment and supplies. any damage they cause to the physical structure is typically 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 severe allergies
- failing to teach a toddler to read as promised
- teaching 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 legal bills, court costs, and settlements or judgments against your business.
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 to you and your passengers
- Uninsured/Underinsured Driver – Pays bills medical and repair 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 damages 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
- lift children
- trip 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.
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:
- fear of major liability lawsuits: If a business owner has a general liability limit of $200,000 but is sued for $500,000, a general policy kicks in to pay for the $300,000 left
- Caring for children from high-net-worth families: Families with more financial resources may be more likely to sue if things go wrong
- renting a larger space: Commercial landlords may require higher liability limits, and umbrella insurance usually meets their requirements
- hiring additional staff: umbrella insurance may extend the limits of the portion of worker’s compensation that covers employee claims
Upper insurance can increase the limits of several underlying policies and is often a more cost-effective way to increase the limits of your other liability insurance policies.
daycare insurance providers
Daycare insurance is a niche product, so homeowners sometimes have a hard time finding providers. For our list of the best insurance providers, we look for well-known and financially stable companies that have a history of specialized coverage. We also include two online agencies that can sell insurance from multiple providers.
coverwallet works with some of the best small business insurance companies, including liberty mutual, chubb and progress, to quote, link and write policies online for businesses in various industries. Daycare providers who want quick quotes should consider working with CoverWallet. the coverwallet app is not only easy to complete, but also returns quotes in seconds. general liability insurance through coverwallet starts at $468.
assure child care
assure child care is a specialized group program that provides members with a cost-effective way to obtain insurance, including general liability, business property and workers’ compensation coverage. essentially ensuring that child care members band together to purchase insurance, allowing insurers to charge a lower rate than if each business owner applied for coverage on their own. this makes child care the best option for small day care businesses and in-home providers struggling to find affordable child care insurance.
markel is an excellent choice for large commercial and home daycare businesses with employees. offers up to $3 million in coverage in both professional liability and sexual assault and abuse insurance. In addition to these high coverage limits, Markel partners with employee screening services, sexual misconduct risk management training programs, and safe driving education providers that can help daycare owners reduce the risk of sexual misconduct. claims. In addition to these, Markel offers accident medical insurance that covers medical expenses for students when they are injured at any sponsored event.
philadelphia insurance companies
Daycare is a major industry for insurance companies of Philadelphia (PHLY), offering a for-profit and non-profit daycare insurance program. the comprehensive program combines multiple coverages, including directors and officers (d&o) insurance. This makes phly the right choice for non-profit childcare companies that want the convenience of having all of their daycare insurance with one company.
cyberpolicy is a trusted broker that searches and compares quotes on all types of commercial insurance policies from major carriers, including commercial progressive, chubb, liberty mutual, and nationwide in all 50 states. This makes it a great option for busy daycare owners who don’t have time to shop around. cyberpolicy does most of the legwork so you can focus on the children in your care while getting the right coverage for your business at an affordable price.
Every child care business, whether it’s a family day care home or a commercial day care center, needs at least some business insurance. Even if you don’t own the building or have valuable business assets to cover, your work with children creates potential liabilities. it is crucial to protect your business if claims arise.