Why is insurance a must for childcare centers?
It's a huge responsibility to provide care and guidance to someone else's child. Whether you operate from your own home or in a commercial space, get peace of mind and financial protection from injuries, lawsuits, and accidents with the right business insurance for your childcare center.
Find coverage that matches your risks
6 insurance policies every childcare center should consider
These insurance policies protect against the most common risks faced by daycare providers.
General liability insurance
General liability insurance covers third-party lawsuits related to injuries, damaged personal property, and other accidents involving customers and clients.
- Bodily injuries
- Accidental property damage
- Slander and other advertising injuries
Business owner's policy
Small daycare facilities with fewer risks can bundle general liability coverage and commercial property insurance together in a business owner's policy, or BOP. It costs less than buying the policies separately.
- Slip-and-fall injuries
- Copyright infringement claims
- Business interruption incidents
Professional liability insurance
This policy covers lawsuits related to harm caused by your daycare business's professional services. It's sometimes called errors and omissions insurance (E&O).
- Errors and oversights
- Missed deadlines
- Breach of contract
Directors and officers insurance
D&O insurance protects your directors and officers from legal costs related to the decisions made on behalf of your nursery school. They may ask for this coverage before they'll join your organization.
- Employee lawsuits
- Mismanagement of funds
- Failure to perform official duties
Workers' comp insurance
Most states require childcare centers with employees to carry workers' compensation insurance. Personal health insurance won’t cover work-related injuries, which makes this policy crucial for sole proprietors too.
- Work-related medical expenses
- Disability benefits
- Legal costs from workplace injuries
Employment practices liability insurance
If a worker sues your childcare center for wrongful termination or another violation of their rights, this policy will pay for your legal costs. It's also referred to as EPLI.
- Unfair hiring and firing practices
- Sexual harassment
- Discrimination
Daycare insurance costs
From our customer data, here's a quick look at average premiums for childcare services:
General liability: $42 per month
Business owner's policy: $82 per month
Workers' compensation: $62 per month
Factors insurance companies look at that can influence the cost of nonprofit and social service business insurance include:
- Type of childcare services offered, such as after school programs, preschool classes, or field trips
- Center's size and revenue
- Number of employees and volunteers
- Types of insurance purchased
- Policy limits, coverage options, and deductibles
- Claims history
- Additional insureds
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Why childcare centers choose TechInsurance
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Common questions about business insurance for daycare and childcare centers
Review answers to frequently asked questions (FAQs) about childcare center business insurance and more.
What are the requirements for childcare licensing in my state?
Depending on the state your childcare center operates in, your licensing requirements will vary. Typically, license requirements include a certain amount of education and training, a background check, and various certifications.
Some examples of requirements include:
- California: To become a licensed child care provider, you must be at least 18 years old, pass a background check, take a tuberculosis (TB) test, pass all training requirements and certifications, and have at least one year of experience at a licensed child care center. Home daycares must also have liability coverage for $100,000 per occurrence and $300,000 aggregate, as well as a surety bond of $300,000.
- New York: For childcare licensure, you are required to have an associate degree in early childhood education, a child development associate (CDA) certificate, two years of experience, as well as pass all mandated trainings, which includes CPR and first aid. Additionally, you must pass a background check, receive medical clearance from a doctor, and provide business information on your childcare program.
- Texas: To get a child care license, you must be 21 years old or older, pass required trainings and certifications, have a high school diploma or GED, pass a background check, provide a current record of a TB exam, submit your application and fees, and obtain liability insurance coverage in the amount of $300,000 per occurrence. The level of education and training required will depend on the number of children you plan to care for.
Do I need business insurance if I run a home daycare?
Simply put: yes. Because homeowner's insurance does not extend to business-related incidents, carrying business insurance is crucial for protecting your in-home daycare.
In fact, it may be required by your state in order to obtain a home daycare license.
There are several reasons to carry business insurance coverage for your home childcare services:
- Legal requirements: It may be mandated by your state to maintain liability insurance in order for your small business to be licensed and operate.
- Protection from lawsuits: Having the right liability and property insurance will cover legal fees, settlements, and costs from third-party accidents and property damage.
- Peace of mind for parents: Your clients may ask for proof of insurance before entrusting you with the care of their child.
What other kind of childcare insurance does my daycare need?
Small childcare facilities face a wide range of risks depending on their operations and activities. The following policies protect against specific risks such as data breaches, employee theft, and auto accidents:
- Business interruption insurance: If your daycare is forced to close temporarily due to a fire or other covered property claim, this policy will help cover lost revenue and daily operating expenses until you can reopen. It's also called business income insurance.
- Commercial property insurance: Homeowner's insurance provides little to no protection for business property, which is why you may need commercial property insurance. It protects against financial losses from fires, storms, vandalism, and burglaries.
- Cyber insurance: This policy helps your childcare center recover financially after a data breach or cyberattack. It helps pay for data breach notification costs, cyber extortion payments, and similar costs.
- Commercial crime insurance: Crime insurance refers to several types of coverage. You can get a property insurance endorsement to protect your childcare business against theft, or a fidelity bond, which provides reimbursement if an employee steals from a client.
- Commercial umbrella insurance: This policy boosts the protection of your underlying liability policies, such as general liability, commercial auto, and employer's liability insurance (part of workers' compensation), when they reach their limits on a claim.
- Hired and non-owned auto (HNOA) insurance: Employees who drive their own cars for work-related purposes should invest in this insurance, as your personal auto insurance won't cover business use. HNOA provides auto liability coverage for personal, leased, and rented vehicles used by your business.
Our licensed insurance agents can help you choose policies that match your insurance needs, comply with state laws and other requirements, and save money on coverage.
