Daycare and Childcare Insurance

Here are some of the top factors that determine insurance premiums during the underwriting process:

• Services offered. Early learning programs, sports programs, and field trips come with different levels of risks; physical activities will generally cost more to insure.
• Number of children and their age group. Childcare providers who are responsible for infants or large groups of children will pay higher premiums.
• Business property and equipment. Expect to pay more to insure a building with a big outdoor playground than a smaller setup.
• Number of employees. A larger workforce brings a higher risk of employee accidents and mistakes, which raises the cost of workers' comp, general liability, and similar policies.
• Annual revenue. Increased business revenue is associated with higher risks and more frequent claims, which results in higher insurance costs.
• Daycare location. Regional factors, such as crime rates, population density, and property values, affect how much you pay for business insurance.
• Policy limits and deductibles. Policies with higher limits cost more but cover more expensive claims. Choosing a higher deductible can lower your premium, but your insurance won't activate until you pay the full amount.
• Claims history. It'll cost more to insure a daycare that has filed an insurance claim in the past than one that has a clean history of claims.

Depending on your location and whether you operate out of your home or a childcare center, you may need to obtain a childcare license from a state licensing board or a local governing body. Some regions require insurance or a bond, and your facility must meet minimum health and safety requirements.

For example, providers in California must get a license if they supervise children from more than one family who are not related to them. In order to get licensed, they need to attend an orientation session, learn the relevant laws and regulations, submit an application, pay a fee, and undergo a facility inspection.

Childcare providers may also need permits from their county or city. For instance, you might need a use permit from your zoning department, an inspection by the local Fire Marshall, or a health permit (especially if you serve food).

Every childcare provider should carry liability insurance for financial protection, as well as the peace of mind it offers yourself and your clients. The specific requirements vary based on your location, whether you're based out of your home or a dedicated space, and the type of services you provide.

Here are the insurance policies you likely need to run your business:

• General liability insurance is required in 23 states for childcare centers and in 13 states for home-based care, while others require you to notify parents of your coverage status. Proof of liability insurance may be needed to comply with licensing requirements, sign a commercial lease, or get a business loan.
• Workers' compensation insurance is required in most states as soon as you hire your first employee, either full-time or part-time. It pays for medical treatment if a worker is injured on the job and provides them with disability benefits while they're recovering.
• Commercial auto insurance covers accidents involving business vehicles. Almost every state requires this coverage for vehicles owned by a business.

Parents may ask to see proof of insurance or a business license before they'll hire you. Being licensed, bonded, and insured shows your business is reputable and can help attract new clients, as they know they'll be compensated in the event of an injury or accident.

In addition, consider having parents sign enrollment waivers. A waiver can't prevent lawsuits related to gross negligence, but it can help you avoid some liability claims.

Yes, when you hire employees, you may need additional liability protection beyond that offered by your general liability policy.

Childcare facilities with employees should consider the following policies:

• Employer's liability insurance is usually included with your workers' comp policy. It pays for legal defense costs if an employee sues their employer over an injury.
• Employment practices liability insurance (EPLI) covers legal costs related to wrongful termination, discrimination, and other violations of employee rights.
• Abuse and molestation coverage is a specialized policy that can pay for lawsuits related to accusations of abuse or sexual misconduct. In some areas, you may need this coverage to get licensed.

Even when liability insurance isn't required, the high cost of medical care and litigation makes it a worthwhile investment for any small business. Employees amplify your risks, so consider increasing your coverage limits when you take on new employees.

If you're unsure which types of coverage you need, an insurance agent can help you choose the right policies for your risks and business size.

In addition to the policies mentioned above, owners of daycare centers and preschools should consider the following:

• Hired and non-owned auto insurance (HNOA) provides liability coverage for personal, rented, and leased vehicles used for business purposes.
• Crime insurance, such as a fidelity bond, provides financial reimbursement if an employee steals from a client or your business. You might need a bond to comply with laws and contracts.
• Commercial umbrella insurance, similar to excess liability insurance, provides coverage when your general liability, commercial auto, or employer's liability insurance reaches the limit on a claim.
• Cyber insurance helps businesses recover financially after a cyberattack or data breach by paying for incident investigations and the cost of complying with state data breach laws.
• Business interruption insurance, also called business income insurance, reimburses you for lost income and day-to-day expenses if your business is forced to close temporarily due to a burst pipe or other covered property claim.

Daycare centers and other childcare businesses can save money on insurance by comparing quotes from different providers. With Insureon, you can get free quotes from top-rated insurance companies by filling out our easy online application.

Other ways to save money include:

• Bundle policies. Small daycare programs often qualify for a business owner's policy, which bundles general liability insurance and commercial property insurance together at a lower price than buying these policies separately.
• Customize your coverage. Choose lower limits or higher deductibles to reduce your premium, but make sure your policy can still cover a potential claim.
• Avoid accidents and claims. You can prevent employee injuries and customer accidents that lead to claims with a risk management strategy that includes employee training, a strong focus on child safety and well-being, and a low staff-child ratio.

Our expert agents can help you find the right insurance solutions for your budget and your business needs, whether you offer early childhood education, in-home daycare, a learning center for school-age children, or any other type of daycare.