Home Daycare Insurance: Costs and Requirements Explained

Insurance coverage for an in-home daycare business helps protect providers from financial losses tied to accidents, injuries, property damage and lawsuits. Depending on your state, maintaining certain types of daycare business insurance may also be necessary to meet licensing requirements.

Home daycare insurance includes commercial policies that help cover risks such as child injuries, accidental property damage and liability claims filed against your business. Daycare liability insurance and other forms of childcare insurance may also help protect your income, business equipment and reputation after a covered incident.

Keep reading to learn more about home daycare insurance, including what types of coverage you may need and what to expect regarding monthly premiums.

On This Page

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  What Is Home Daycare Insurance?

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  Home Daycare Insurance Coverage Comparison

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  Types of Home Daycare Insurance Coverage

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  Home Daycare Requirements

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  How Much Does Home Daycare Insurance Cost?

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  What Happens if You Don’t Have Home Daycare Insurance?

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  Home Daycare Insurance at a Glance

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  How To Get Home Daycare Insurance

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  FAQs

What Is Home Daycare Insurance?

Home daycare insurance helps protect you when you run a daycare from a private residence. Home daycare insurance includes various commercial policies that may vary based on your business needs and legal requirements, with each type of policy protecting against different risks. Some of these risks could include:

• Bodily injury to a child or employee
• Damage to someone else’s property
• Professional liability lawsuits over a harmful mistake or error
• Injuries or property damage done while driving a vehicle for the business
• Damage to the business’s property

Is Insurance Required To Run a Daycare?

You’ll typically need home daycare liability insurance to comply with state regulations when obtaining a daycare license — a necessary step for operating a daycare business. Other coverage types, such as workers’ compensation insurance, may also be required. Whether insurance is required and the amount of liability coverage you need varies by state, so review your local regulations to ensure you have enough coverage.^[1][2]

What Is the Difference Between Licensed and Unlicensed Daycare Insurance?

While many states require licensed daycare providers to carry insurance, most don’t require unlicensed providers to carry coverage. Unlicensed daycare providers work in a more informal capacity, such as being related to the children being cared for or working on an occasional basis. Because of this informality, unlicensed daycare providers don’t face the same legal requirements as licensed providers.^[3]

However, unlicensed daycare providers should still consider getting insurance, as homeowners insurance won’t protect against liability claims while providing daycare services without a business-use endorsement.^[4]

Home Daycare Insurance Coverage Comparison

Below, we’ll briefly compare different types of home daycare insurance coverage:

Types of Home Daycare Insurance Coverage

In addition to state-mandated insurance coverages, other policies may be necessary depending on how your business operates. Below are some of the most important types of insurance coverage to consider when running a home daycare service.

General Liability

General liability insurance protects your company against claims involving bodily injury or property damage due to your services, operations or products. For example, if a child is playing in your yard and throws a ball through a neighbor’s window, general liability coverage would typically cover the window’s replacement cost.

Additionally, general liability insurance can cover medical costs if a child falls and breaks their arm while in your home daycare.

Professional Liability

Professional liability insurance, also known as errors and omissions coverage, protects your business if it is accused of making a mistake in its practices. For example, if your daycare accidentally serves undercooked food that makes children sick or includes a known allergen, professional liability insurance could help cover legal costs and settlement payments to the child’s family.

Commercial Property

Commercial property insurance helps protect your company’s assets, including equipment and the building itself. While homeowners insurance may cover damage to your property if you offer home daycare services from your personal residence, it might not cover equipment used for business purposes beyond $2,500.^[5]

For example, if a child spills water on expensive electronics used in your daycare program, commercial property insurance may help cover replacement costs.

Workers’ compensation

You may be legally required to carry workers’ compensation insurance, depending on your state and the number of employees in your home daycare program.^[6] This coverage helps provide financial benefits for lost wages and medical expenses if an employee cannot work because of a job-related injury or illness.

Commercial Auto

Commercial auto insurance can cover damage to company-owned vehicles and protect their drivers from liability claims due to negligent driving. For example, if you get into an accident while driving children to a park for a day out, commercial auto liability coverage would cover property damage or bodily injuries you cause to another vehicle or person.

Even if you use your personal vehicle for daycare-related activities, standard personal auto insurance policies typically exclude business use. You may need a business-use endorsement or separate commercial auto policy to avoid having a claim denied.^[7]

Home Daycare Requirements

Most home daycare businesses require licensure, which may require providers to:^[8]

• Maintain a minimum staff-to-child ratio
• Ensure employees receive child care training, including CPR and first aid certification
• Meet health and safety standards for operating a daycare from a private residence
• Enforce employee qualification requirements, such as minimum age rules and background checks
• Comply with applicable state regulations, including home daycare insurance requirements

How Much Does Home Daycare Insurance Cost?

The cost of home daycare insurance varies based on the types of commercial policies your business needs. Below are a few average monthly premiums for common home daycare insurance coverages from The Hartford:

Home daycare businesses could also consider a business owner’s policy (BOP), which combines general liability, commercial property and business interruption coverages for a bundled price, often helping lower costs by 10% or more.^[14]

Factors that can influence the cost of your home daycare insurance could include:

• The number of children you care for
• The number of employees you have
• Work experience as a home daycare provider
• Claims history
• The value of your home daycare business’s property
• The number of vehicles you use for your business
• Your coverage limits and deductibles
• Whether you take advantage of discounts or insurance bundling

What Happens if You Don’t Have Home Daycare Insurance?

Without the necessary insurance, you may be unable to get a home daycare license. Operating as a home childcare provider without a license could result in fines or criminal charges.^[15] For example, operating without a license in California could result in fines of up to $200 per day or a misdemeanor charge.^[16]

Additionally, without home daycare coverage, you may be responsible for paying legal fees associated with claims of property damage or bodily injury out of pocket, which can financially burden your business.

Home Daycare Insurance at a Glance

We’ll quickly review the essential information you should know about home daycare insurance:

• Home daycare insurance includes policies that help protect your childcare business when operating out of your home, often including general liability, commercial property and other coverage options.
• General liability is often required to obtain a state childcare license, and other types of commercial insurance, such as workers’ compensation and commercial auto, may also be necessary.
• A child care license may not be necessary if you operate informally, such as occasionally caring for a young relative, but it is required to legally operate a business caring for several unrelated children.
• Failing to purchase home daycare insurance could result in fines, legal consequences and leave you vulnerable to financial hardship if you’re sued after damages or an injury to one or more of the children you’re caring for.

How To Get Home Daycare Insurance

You’ll need to shop around to understand what coverage options are available. Get quotes from 3 to 5 insurance companies to compare costs and coverage. You’ll typically need to inform each insurer about your business details, including how long you’ve been in business, your location and the number of children you’ll be caring for. However, it can be tedious and time-consuming to provide this information to each insurer individually.

You can speed up this process by using an insurance marketplace like SmartFinancial. After you answer a few questions, we’ll connect you with a licensed insurance agent to help you find the right commercial coverage your home daycare business needs. Click here for free commercial insurance quotes today!