The Complete Home Daycare Insurance Guide

Home daycare insurance protects your business from liability claims. You can buy home daycare insurance as a rider through your homeowners plan if your business is operated out of your home. You will need a standalone commercial policy if your business is located elsewhere. Exclusions for home daycare insurance may include recreational equipment and injuries sustained from animals you own. You may also have a cap on how many children you can care for at a time, not including your own kids. Keep reading to see if home daycare is needed for your business and where you can get coverage.

What Is Home Daycare Insurance?

Home daycare insurance is coverage that can be purchased as a separate commercial policy or as a rider through your homeowners plan that offers liability protection. The daycare rider is meant to cover at-home daycare programs while the separate commercial policy is used for daycare businesses that are located at a different facility. You will need daycare insurance of some kind if you’re being paid to watch other people’s children.

If you’re simply watching family members (nieces, nephews or grandchildren) then your homeowners policy should supply adequate coverage in case something happens. However, once you start getting paid for taking care of another person’s child, you will want to get a daycare rider or a separate policy.

You can buy home daycare insurance as a rider through your homeowners plan if your business is operated out of your home.

If you have a small daycare business that’s based in your home with six or fewer kids (minus your own children), then a daycare rider should provide adequate coverage. If your daycare business is located away from your home with more than six children under your care, you’ll need to purchase a standalone daycare insurance policy. If your policy limits provide inadequate coverage, you can buy an umbrella policy to extend your coverage limits. Umbrella insurance is usually sold in $1 million increments and is relatively inexpensive to buy.

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What Does Home Daycare Insurance Cover?

What is covered under home daycare insurance will depend on how extensive your policy is. Home daycare riders are great for small operations held in your home that involve only a few children, usually six or fewer not including your own children. Standalone daycare policies are a form of commercial insurance for childcare businesses that are located outside the home and have a substantial clientele. Both types of coverage can help protect you from claims involving:

  • Negligence
  • Errors in services
  • Omissions
  • Misrepresentation
  • Violation of good faith
  • Vehicle liability
  • Poor advice
  • Physical abuse of children (corporal and sexual)
  • Verbal abuse of children
  • Vehicular accidents

You will need a standalone commercial policy if your business is located outside the home or if you care for more than 6 children (not including your own).

What Does Home Daycare Insurance Include?

Your home daycare policy can include several forms of coverage that can help protect your business and your employees.

Liability Insurance

Liability coverage has several subtypes that may be included in a standalone commercial plan or in a daycare insurance rider through a homeowners policy. Below is a list of the liability coverages that can be included in a home daycare insurance plan:

General liability - General liability insurance, also known as business liability insurance, provides protection for your company against claims that involve bodily injury or property damage due to your services, operations or products.

Commercial auto liability - If you offer pickup and drop-off service, commercial auto liability protects company-owned vehicles and their drivers from liability claims due to negligent driving. Coverage includes personal liability and property damage (PLPD) insurance.

Corporal punishment liability - Corporal punishment liability is also referred to as educator liability or teacher liability and is designed to safeguard employees against claims of physical injury caused to a child at the hands of an employee or business manager.

Abuse and molestation liability - Abuse and molestation liability coverage provides protection against accusations of sexual abuse leveled at your business. This coverage will help cover any legal fees and medical expenses your operation is required to pay.

Errors & Omissions Insurance

Errors & omissions insurance (O&E insurance or professional liability insurance) is used to provide protection in the event your business is accused of making a mistake in your business practices and is only available in standalone commercial policies. O&E will specifically cover you from claims of:

  • Negligence
  • Errors in services
  • Omissions
  • Misrepresentation
  • Violation of good faith
  • Poor advice

If you’re sued, O&E will help pay for:

  • Attorney fees
  • Court costs
  • Administrative costs
  • Settlements and judgments

What About Workers Compensation?

If your home daycare program has employees, you are legally required to have workers compensation. This coverage is meant to supply financial benefits for lost wages and medical expenses in the event an employee cannot work due to injury or illness that is caused directly by their job. An employee can lose their right to workers compensation if the injury or illness is a result of drug/alcohol use or if they purposefully set out to harm themselves or another person.

Home Daycare Insurance Exclusions

There are several exclusions that may be listed on your home daycare policy. These include:

  • Recreational equipment or things considered attractive nuisances (trampolines, swimming pools and playground equipment)
  • Injuries caused by animals that you own
  • Going over the cap on the number of children at your daycare (this number does not include your own children)

If your home daycare program has employees, you are legally required to have workers compensation.

How Much Does Daycare Insurance Cost?

The cost for daycare insurance is going to vary by provider and location much like any insurance. The best thing you can do is shop around. Below is a list of some providers that offer commercial coverage tailored specifically for daycare businesses:

  • Assure Child Care
  • Next Insurance
  • Markel Insurance
  • American Family Insurance (offered as a rider on your homeowners policy)

Virtually all of the other major insurance carriers will offer commercial insurance plans. However, your typical commercial policy doesn't provide punishment liability or abuse and molestation liability.

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Things To Consider When Buying Home Daycare Insurance

There are a few things you need to consider when buying daycare insurance.

  1. How big is your operation? The size and intricacy of your business will dictate the type of insurance you get. For instance, American Family Insurance offers a daycare insurance rider that extends your homeowners insurance to your business but is only available for operations that have six or fewer clients to look after. Anything bigger would require a standalone commercial policy.
  2. Do you have employees? If your daycare business has employees, you will need workers compensation.
  3. Are you using vehicles? Some daycares may use vehicles to shuttle children to and from their homes or to take the kids on outings to various places. Buy a policy that includes commercial auto insurance, which provides coverage for vehicles that are owned by the business. Your private car insurance will not cover you if you have an accident during business-related drives.
  4. Am I expanding my business? If your daycare business has moved past the point of being manageable at your home, and you’re looking to move your operation elsewhere, a home daycare rider will not suffice as they are meant for small operations that are run out of your residence. Instead, a separate daycare insurance plan would need to be purchased to make sure you and any employees you have are covered.

Daycare Insurance FAQs

Do you have to get home childcare insurance?

Most states require home daycare programs to get daycare insurance in order to be licensed with the state. At-home daycare programs can get coverage with a daycare rider through the owner's homeowners policy while daycare businesses located elsewhere would need to get a standalone commercial policy.

What’s covered under errors & omissions insurance?

Errors & omissions insurance will cover costs associated with claims accusing your business of negligence, omissions, inaccurate advice and misrepresentation. Legal costs for your defense and settlements will also be covered under errors & omissions insurance, which is only offered in a standalone commercial policy.

Where can I buy home daycare insurance?

You can get home daycare insurance through Assure Child Care, American Family Insurance, Next Insurance and Markel Insurance. All other major providers have commercial insurance for your business, but they likely won’t include punishment liability or abuse and molestation liability.

Key Takeaways

  • Home daycare insurance covers your childcare business against accusations of abuse, corporal punishment or negligent behavior.
  • Home daycare insurance can be purchased through a standalone policy or with a rider through your homeowners insurance if your business operates out of your home.
  • You will need workers compensation if you have any employees working for your daycare program.

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