7 Insurance Policies for Daycare Business

Thang Truong
Thang Truong
Updated on:

Working with children is so rewarding. The innocent laughter, their curiosity, the way they soak up everything like little sponges. That’s probably why you decided to open a daycare facility in the first place. But, let’s face it—children are prone to accidents. When you started your daycare business, you worked hard to make it successful. Now, you need to look into insurance to protect yourself and your business. 

What is Daycare Insurance?

Day care insurance is a special type of business insurance designed to meet the needs of daycare providers. 

There are two types of day care centers, and both would do well to explore their insurance options. Many states require that daycare facilities be licensed, and if so, they will also require insurance. 

  • In-home day care
  • Commercial day care

7 Insurance Policies for Daycare Business

  1. General liability insurance
  2. Commercial Property insurance
  3. Professional liability insurance 
  4. Commercial auto insurance
  5. Abuse and molestation coverage
  6. Workers’ compensation insurance
  7. Umbrella insurance

Not all day care providers will need all of the 7 different types of business insurance policies below, and if you just occasionally babysit for someone in your home, you don’t need day care insurance at all. 

1. General Liability Insurance for Daycare Business

This covers third-party claims for bodily injury, property damage and advertising injury or harm to your reputation. If you get only one type of insurance, make it general liability insurance. Small children are accidents waiting to happen. General liability insurance will protect you when one of your charges climbs on your kitchen counter and then falls down and breaks an arm.

Some states require some level of general liability insurance for daycare facilities, so be sure to check your states regulations. 

>>MORE: How Much does General Liability Insurance Cost?

2. Commercial Property Insurance for Daycare Business

This covers assets, building, equipment, and supplies you need to do your business. For a day care provider, this might include art supplies, toys, and some furniture. 

If you operate a day care center out of your home, you might not need it. The structure of your house is covered under your homeowners’ policy, so you don’t need to cover it.  However, your homeowners’ policy might require you to cover your in-home day care center under a separate policy. If you don’t, they could cancel your homeowners’ policy. 

 If you run a commercial day care center and rent space somewhere, you might want commercial property insurance

3. Professional Liability Insurance for Daycare Business

This is also called Errors and Omissions (E&O) insurance, because it protects you in case you make a grievous error that results in harm to a client. This covers you and your employees from claims of negligence. 

For example, you allow the children to go outside to play. A bee stings one of the children and it turns out that they’re allergic. Here’s where professional liability insurance will help you. 

>>MORE: Best Professional Liability Insurance Companies for Small Business

4. Commercial Auto Insurance for Daycare Business

If you don’t pick up and transport children to and from your day care facility, you don’t need commercial auto insurance. But if you or any of your employees take children on field trips or regularly drop them off, you should get a commercial auto policy. Your personal vehicle will be covered while it’s being used for your business in case of an accident.

>>MORE: How Much does Commercial Auto Insurance Cost?

5. Abuse and Molestation Coverage for Daycare Business

It’s a sad fact of modern life that working with children sometimes included allegations of abuse. Whether the abuse happened or didn’t happen, you should consider Abuse and Molestation Coverage. This will cover your legal costs of defending your business in court. Sometimes it’s included under your general liability policy, but not always, so be sure and read your policy carefully. 

6. Workers’ Compensation Insurance for Daycare Business

If you have employees, workers’ compensation insurance is a must since it is required by law. This will cover the costs of employees work-related injuries or illnesses. 

Say your employee arrives bright and early for work one snowy morning, before you shoveled the walk. When they slip on the ice and break a wrist, workers’ compensation insurance will cover their medical bills and lost wages. In some states, workers’ compensation insurance is required if you have just one employee. Check your states regulations. 

7. Umbrella Liability Insurance for Daycare Business

This is liability insurance that kicks in after you reach the limits of your other liability policies. A long and messy court battle can easily exceed those limits, so it might be a good idea to consider Umbrella Liability insurance.

What Affects the Business Insurance Rates of My Daycare Business?

Many things will affect what you will pay for daycare insurance, including:

  • How many children you care for
  • Location
  • Whether or not you provide transportation
  • Whether you do background checks on employees
  • Whether you are licensed
  • If you allow children outside without supervision
  • If you have any employees with criminal records

Many states require that daycare facilities be licensed and insured. Even if your state does not require insurance, parents like to see that the daycare facility is insured, so it may bring you more business. 

Compare DayCare Insurance Quotes with Digital Brokers

If you’re tired of going from website to website and answering the same questions, you could go to an online aggregate that will find insurers for you with just one application. 

Coverhound couldn’t give us a quote, but gave us an estimate of between $20 and $40 a month for general liability. 

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Coverwallet recommended we look into commercial property insurance and workers’ compensation insurance, then said it couldn’t provide us with an online quote for our in-home daycare business, but said we should call to talk about it. 

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>>MORE: The 5 Best Providers of Daycare Insurance

Final Thoughts

Providing daycare for children is a rewarding and demanding job. Don’t forget to buy business insurance to protect yourself and your business. 

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Thang Truong
Thang Truong

Thang Truong covers small business insurance and small business success at BravoPolicy. He is a licensed P&C insurance agent. Previously, he held product leadership positions at realtor.com, Capital One, NerdWallet, and Mulberry Technology. He holds a MBA degree from UC Berkeley - Haas School of Business.

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