Home Daycare Insurance: What It Is, Costs, and Companies

Supervising children exposes home daycare organizations to a variety of concerns. Art projects can go wrong, employees can make blunders, and children can be injured.  As a result, most states require in-home daycare businesses to get liability insurance before licensure. If your duty is to protect children in your house, you should have a policy in place to protect your company from financial losses. Even if your state does not require it, having a comprehensive home daycare insurance package will secure your livelihood and improve your reputation in the eyes of parents.

Do I Need Home Daycare Insurance?

Yes. You need home daycare insurance if you own an in-home daycare business. Most states require it for licensing, and parents may be required to show proof of insurance when enrolling their children. You'd be on the hook for your legal bills if someone filed a lawsuit against you if you didn't have home daycare insurance. Furthermore, you may be held liable for property damage or medical bills.

For example, if a youngster slips and fractures a bone while playing in your home, your company could be held liable for the child's medical expenditures. If one of your employees accidentally breaks a child's assistive technology gadget, your company may be liable for repair or replacement. Your insurance provider would cover the cost if you had the proper policies in place. 

What Is Home Daycare Insurance?

Home daycare insurance is a collection of insurance policies designed to protect in-home daycare enterprises from a variety of risks. Some coverages may be required only for daycare businesses with employees or those that provide pick-up and drop-off services. However, general liability insurance is always required for daycare businesses. The following are the most frequent coverages that your daycare may require. 

General Liability Insurance

General liability insurance covers legal fees and judgements resulting from claims that your daycare was negligent. It protects against bodily harm, property damage, and personal or advertising hurt. Medical payments coverage is included in general liability insurance, and it pays for medical bills or funeral expenses if somebody is hurt during a business visit to your house. 

Professional Liability Insurance

Daycare employees supervise, educate, and care for children using their professional knowledge. This raises the risk of professional negligence litigation. For example, if your daycare provides educational enrichment and a child isn't progressing, parents may sue. Your legal defense and judgements would be covered by professional liability insurance. 

Business Personal Property Insurance

While your homeowners insurance policy will cover the structure of your home against common perils, the limits on your policy for business equipment may be insufficient. If you require additional coverage for upgrades to your home, furnishings, toys, and daycare equipment, you can either add an endorsement to your home's policy or get commercial personal property insurance. 

Business Interruption Insurance

After a covered loss disrupts your business operations, business interruption insurance can help cover your debts and replace your net lost income. For example, if a fire in your home forces you to close your doors, business interruption insurance ensures that you can still pay your staff and make your mortgage payment. Keep in mind that business interruption insurance may exclude communicable diseases such as COVID-19. 

Business Owner’s Policy

Some daycare operators may opt for a business owner's policy, which combines general liability insurance, commercial property insurance, and business interruption insurance into one easy package. Standard BOPs, on the other hand, may include superfluous coverage for structures that overlap with your homeowners insurance policy, so choose a carrier that lets you tailor your BOP. 

Abuse and Molestation Insurance

Most general and professional liability insurance policies exclude coverage for legal expenses incurred as a result of an employee being accused of threatened or actual physical, mental, or sexual abuse. Because of this, some companies provide an endorsement for abuse and molestation coverage. It compensates for your company's legal defense and judgments in abuse-related cases. Some policies might only cover sexual abuse.

Corporal Punishment Insurance

This covers the cost of lawsuits brought against your company if a staff is accused of physically injuring a kid while being reprimanded. 

Workers’ Compensation Insurance

Most states require employers with a certain number of employees to have workers' compensation insurance. It pays for medical expenditures and missed wages for employees who are injured or unwell while doing their job obligations. For example, if a child bites an employee and draws blood, workers' compensation insurance would cover the employee's treatment and time away from work. Workers' compensation insurance may cover childcare workers who contract COVID-19 in some states.

Commercial Auto or Hired and Non-Owned Auto

If your company provides pick-up and drop-off services or owns a vehicle for other purposes, you'll need commercial auto insurance. Most states will require you to have at least bodily injury and property damage liability coverage, as well as collision and comprehensive coverage to cover damage to your business vehicles. You'll need hired and non-owned auto insurance if you or your staff use your own vehicles for professional purposes, whether it's transporting children or simply picking up extra wipes from the store. 

Home Daycare Insurance Cost

The cost of in-home daycare insurance is determined by unique criteria such as the number of staff and children in your care, as well as the type of coverage and limitations you select for your business. According to Next Insurance, the majority of its daycare firms pay between $56 and $78 per month for general liability insurance, but most home daycares will also require other coverages. In-home childcare insurance will typically cost between $450 and $1,350 per year. However, if you require commercial auto insurance, you will have to pay more. 

Best Daycare Insurance Companies

Markel Insurance

Pros

• Offers a robust in-home daycare package
• Coverage is occurrence form
• Free additional insureds
• Flexible payment options

Cons

• Does not offer commercial auto

Markel provides a comprehensive, occurrence-based in-home childcare policy that includes general liability, abuse and molestation coverage, and accidental medical insurance. Daycares with up to 18 children are covered by the policy. Professional liability and workers' compensation insurance are also available from the company, however commercial motor insurance is not. 

American Family Insurance

Pros

• Abuse and molestation, and corporal punishment coverage
• Commercial auto liability coverage
• Bundling discounts
• Online claims and 24/7 support

Cons

• Home daycare package limited to six children or less
• Not available in Minnesota

American Family offers a house insurance plan that includes general liability, commercial auto liability, corporal punishment liability, and abuse and molestation liability coverage for in-home daycares. The product, however, is only offered to in-home daycares with six or fewer children enrolled. AmFam provides online quotes and claims, as well as a highly rated mobile app and 24/7 help. 

Great American Insurance Group

Pros

• Offers a robust package of coverages
• Risk management services and toolkits
• Coverage available in occurrence form
• A+ financial strength rating from AM Best

Cons

• No online quote or application

Great American provides all of the coverages a daycare may require, including different limits for general liability, professional liability, and abuse or molestation coverage, which includes bullying lawsuits. You can select between occurrence-form or claims-made coverage, and the company also provides commercial auto, umbrella, inland marine, and other coverage options. Furthermore, Great American provides risk management services to help prevent incidents, such as on-site child abuse prevention training and a smartphone app for anonymously reporting inappropriate behavior. 

Next Insurance

Pros

• Quick online quote and application
• Offers a live certificate of insurance for easy sharing
• Save 10% for bundling multiple policies

Cons

• Doesn’t offer abuse or molestation coverage

Property insurance, general and professional liability insurance, commercial or hired and non-owned auto insurance, and workers' compensation coverage are all available via Next Insurance. When you buy two or more policies, you can save up to 10%. Premiums are also reasonable, with most home daycares paying between $56 and $78 per month for general liability coverage. However, the company does not provide abuse or molestation coverage, which may leave a gap in your policy's coverage.