Did you just start a daycare center and you are wondering the kind of liability insurance to buy for your daycare business? If YES, then read on to know more. When you own and manage a daycare center or provide any kind of childcare service, the parents who use your services trust you to keep their children safe. As much as that may be your intent, you can’t always be sure that nothing will go wrong.
Children are, by their very nature, unpredictable. These little beauties tend to require a lot of supervision, attention, and assistance. Sometimes, in a split second, something can happen before you can stop it.
If something should happen that causes a child to be injured, results in property damage, or otherwise leaves you open to a lawsuit of any kind, it can be very expensive. Have it in mind that we live in a very litigious society so you may even be sued without valid cause. Despite the lawsuit being spurious, the legal costs alone to go through a court process and prove you didn’t do what they are alleging could be more costly than your business can afford.
In the same vein, if you are depending on this business for your income and a natural disaster, such as a storm, causes damage to your childcare location, you’ll have nowhere to run your business. So many things can go wrong and can cost you more than you can afford to pay.
One of the most common types of insurance needed for daycare services are general liability insurance and property liability insurance. General liability policies are known to cover bodily harm caused by your business or on your property and property damage caused by an aspect of your business.
Property liability coverage, meanwhile, is for damage to your property that you couldn’t control. You may need additional coverage such as auto liability if you use your vehicle for the daycare business (such as picking up children from their homes).
Note there is no standard daycare insurance policy for childcare or daycare services. The kind of insurance that is required can be dictated by state laws, circumstances, or both. Laws detailing the type of insurance you need will vary by state and type of childcare. For instance, a daycare center may have varying state requirements than a person or family who provides daycare from their homes.
If you provide daycare from home, don’t assume you are covered by homeowner’s insurance, check with them because that’s far from a guarantee. Even if your state doesn’t require that you have insurance, you should get coverage to make sure you are adequately protected.
What are the Basic Insurance Policies for a Daycare Business?
A daycare or child care service is one of the most important but potentially litigious small business one can run. Taking care of others children, especially when young, can put your finances as well as your place of business at risk. To cast aside the worry about a ruinous litigation or destruction to your home or place of business, you need have the right business insurance policies. Here are some policies that are common to most daycare businesses.
Table of Content
- General Liability Coverage
- Property Insurance Coverage
- Professional Liability Insurance
- Abuse & Molestation Coverage
- Commercial Vehicle Insurance Coverage
- Workers’ Compensation Insurance
- Accident Insurance
- Umbrella Liability Insurance
- Philadelphia Insurance Companies
- Assure Child Care
General Liability Coverage
Note that this type of coverage is a necessity for any daycare business that allows members of the public access to its premises. Have it in mind that this coverage takes care of costs from injuries that third parties sustain on the premises. Even the smallest injuries, falls, or accidents can leave an uninsured provider digging in her own pocket to cover medical expenses.
Property Insurance Coverage
As a daycare owner, you indeed have a huge amount of money invested in your property, including equipment and facilities. Therefore, having coverage on the building that houses your daycare and the contents of the building is imperative. Note that Building coverage provides protection for damages to the building you use for your centre, whether that damage is from severe weather, property crimes, or even falling objects.
Flood and earthquake protection may also be necessary, depending on the area where you live. However, when selecting coverage, make sure to include protection for the contents of the daycare center. This might be furniture, electronics, toys, and cribs, among other items.
If the property suffers a loss due to fire, theft, vandalism, and so forth, this coverage ensures you can replace what’s lost and stay operational. Protection is also necessary for the outdoor equipment that you have invested in for your business.
Professional Liability Insurance
Professional liability insurance, also called errors and omissions are known to cover the cost of your legal defense if you or your staff members are accused of causing harm while providing professional services. For instance, a professional liability policy often covers parents accusing you or your assistant of:
- Giving peanuts to a severely allergic child
- Failing to teach a toddler how to read as promised
- Teaching parents a new swaddling technique that harms their infants
Since claims like these involve your expertise, they fall under professional liability insurance, which typically pays for legal bills, court costs, and settlements or judgments against your business.
Abuse & Molestation Coverage
No daycare provider wants to think that an employee is capable of such acts, but it does happen, and it leaves daycare owners open to litigation if they do not have liability coverage. Abuse and molestation insurance cover these accusations, even if they are meritless, and some also cover corporal punishment.
Sometimes, this coverage is included in either your professional or general liability insurance, but standalone policies are also available for business owners who prefer to ensure adequate coverage. Daycare businesses tend to get abuse and molestation insurance to cover their business’ legal defense costs if one of their employees is accused of sexual misconduct.
Defense costs more or less are paid even when you are found liable or negligent in supervising the accused employee. The coverage seldom extends to the perpetrator in an intentional act. Some insurers may even require you to repay their costs if your employee is found guilty.
Commercial Vehicle Insurance Coverage
For daycare businesses that use company vehicles to transport children, commercial vehicle insurance is crucial. This insurance pays costs associated with property damage and injuries when daycare employees are involved in accidents.
Daycare providers who drive their personal vehicles for business purposes 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 they are driving their students in their personal vehicles.
Workers’ Compensation Insurance
Workers’ compensation insurance is known to cover the costs associated with employees’ work-related injuries and illnesses like medical bills and lost wages. Most states require daycare owners to have coverage as soon as they hire even part-time staff who may suffer injuries from:
- Slipping on wet floors
- Lifting children
- Tripping over playground equipment
Also have it in mind that workers’ compensation insurance is important for business owners who have employees because neither professional nor general liability covers employees’ injuries, and you can’t add workers’ comp to a BOP. Additionally, in most states, workers’ comp covers your legal fees if the injured employee decides to sue.
Although not strictly business insurance, accident insurance can be a crucial part of protecting a daycare. Policies pay a specified benefit to help pay medical expenses after a child suffers an injury under your supervision. Daycare owners usually need these coverage:
- Accidental medical expense (AME): Pays costs such as hospital bills, emergency room costs, and ambulance services
- Accidental death and dismemberment (AD&D): Pays a set benefit amount if a child loses a limb or dies as the result of a covered accident
AME can be acquired as primary or excess coverage. As primary coverage, AME pays the injured party’s costs regardless of any other health insurance that may apply. Excess coverage only pays costs that exceed the injured party’s health insurance.
Umbrella Liability Insurance
Umbrella liability insurance offers additional coverage when claims exceed the limits of underlying liability policies, including general liability and commercial auto insurance. Have it in mind that legal fees can exceed coverage limits easily on liability policies, and one liability policy can’t make up the difference for another. Umbrella insurance picks up where your other liability policy falls short. Instances of when a daycare owner may want umbrella insurance include:
- Fear of large liability lawsuits: If a business owner has a general liability limit of $200,000 but issued for $500,000, an umbrella policy kicks in to pay the remaining $300,000
- 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 need higher liability limits, and umbrella insurance usually satisfies their requirements
- Hiring additional staff: Umbrella insurance can extend the limits on the portion of worker’s comp that covers employee lawsuits
Umbrella insurance can increase the limits on multiple underlying policies, and it’s indeed a more cost-effective way to increase the limits on your other liability insurance policies.
Top Providers of Daycare Liability Insurance
Depending on the coverage, annual costs of daycare insurance range from $400 to $1,350 for in-home childcare businesses and from $1,000 to $3,500 for commercial daycare centers. Nonetheless, here are top providers to seek or consider;
Markel is a wonderful choice for both in-home and large commercial daycare businesses with employees. It provides up to $3 million in coverage on both professional liability and abuse and molestation insurance. In addition to all 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 filing claims.
Philadelphia Insurance Companies
Daycare is one of the top industries for the Philadelphia Insurance Companies (PHLY), and it provides an insurance program for non-profit and for-profit childcare centers. Also note that the comprehensive program combines multiple coverages, including directors’ and officers’ insurance. This makes PHLY the ideal choice for non-profit daycare businesses that want the convenience of having all their daycare insurance with one company.
CyberPolicy is a reliable broker that shops and compares quotes on all types of business insurance policies from top carriers, including Progressive Commercial, Chubb, Liberty Mutual, and Nationwide, in all 50 states. Note that this makes it a direct choice for busy daycare owners who don’t have time to comparison shop. The company does most of the legwork so that you can focus on the children in your care while getting the right coverage for your business at an affordable price.
CoverWallet is known to work with some of the best small business insurance companies, including Liberty Mutual, Chubb, and Progressive, to quote, bind, and issue policies online for businesses in a number of industries. Daycare providers who want fast quotes should consider working with CoverWallet. Aside from the fact that the CoverWallet application is easy to complete, it also returns quotes in just seconds. General liability insurance through CoverWallet starts at $468.
Assure Child Care
Assure Child Care is renowned as a specialty group program that gives members a cost-effective way to get insurance, including general liability, commercial property, and workers’ compensation coverage. Notably, Assure Child Care members band together to buy insurance, allowing insurers to charge a lower rate than if each individual business owner applied for coverage on its own. Note that this makes Assure Child Care the best choice for small daycare businesses and at-home providers who struggle to find affordable childcare insurance.
Being responsible for children could open you up to a lot of legal issues. Proper coverage is the responsible way to protect everyone involved. Even if you’ve never have any issues that require you to use your insurance, having it may make parents feel safer and help you get more business. Work with a commercial insurance specialist to find out what types of coverage are essential for your business be it a commercial center or in-home child care – prior to opening your facility.