Running a day care or child care service is one of the most important but potential litigious small businesses 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. In this guide we discuss the average cost of daycare business insurance.
Which Types of Insurance Cover Child Care Services?
The most common types of insurance needed for childcare services are general liability insurance and property liability insurance. General liability policies cover bodily harm caused by your business or on your property and property damage caused by an aspect of your business. Property liability coverage is for damage to your property that you couldn’t control. Both are necessary. 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).
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 regarding the type of insurance you need will vary by state and type of childcare. For example, a daycare center may have different state requirements than a person or family who provide daycare from their homes. If you provide daycare from home, don’t assume you’re 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’re adequately protected.
How Much Does Daycare Insurance Cost? $400 to $,1350
Generally speaking annual insurance costs for an in-home daycare will range from between $400 and $1,350 ($37 to $59 per month) while coverage for a commercial daycare center will cost anywhere from $1,000 to $3,500 ($57 to $79 per month). However, insurance costs for your specific daycare will vary depending on a number of factors that will be unique to your situation. Premiums will vary based on a number of factors including:
- Kinds of coverage included
- Coverage amount
- History of prior claims
- Number of children
- Services provided
- Payroll amounts
- Level of experience
General Liability Insurance
As a daycare, you will likely pay anywhere between $200 and $600 per year in just general liability. As we mention your total payment will depend on how much liability coverage you need. You should have roughly $500k to $1MM liability insurance policy. GLI will shield you financially from:
- Litigation from injuries sustained by children or parents while on your premises
- Medical expenses caused by an injury on your premises
- Litigation from emotional distress claimed by parents or children in your care
Professional Liability Insurance/E&O Insurance
It is also recommended to have an errors and omissions policy, sometimes called professional liability insurance. This type of coverage protects your small business in a different way from general liability insurance. Professional liability covers you from ruinous mistakes caused by neglect or professional mistakes. As you may guess, this is crucial for any care giver. PLI can shield you financially from:
- Accusations of neglecting a child
- Abuse and molestation accusations
Why Do Child Care Services Need Insurance?
When you run a daycare center or provide any kind of childcare, the parents who use your services depend on you to keep their children safe. As much as that may be your intent, you can’t be sure that nothing will go wrong. Children are, by their very nature, unpredictable. They also require a lot of supervision, attention, and assistance. Sometimes, in a split second, something happens 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 could be very expensive. 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’re alleging could be more expensive than your business can afford.
Likewise, if you’re 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 and lose those wages. A lot could happen that could cost you more than you can afford to pay. Making sure your childcare business is properly insured can eliminate or greatly reduce the risk of such circumstances putting you out of business.
What Are Common Insurance Claims for Daycares?
A daycare can be open to a lot of different kinds of claims. Here are some of the most common ones:
- Negligent Supervision: This means that a parent believes you weren’t watching their child well enough at the time of an injury.
- Bodily Injury: Kids get hurt all the time, however, if they get hurt on your watch, you may be held liable.
- Contagious Disease: If one parent brings in a child with measles, you could have a real problem on your hands.
- Abuse & Molestation: As much as we may not like to think about it, an employee could hurt a child while working for you or even just be accused. Either could be very expensive.
- Corporal Punishment: In the heat of the moment someone could lose their temper and spank a child in your care.
How to Find Daycare 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 never have any issues that require you to use your insurance, having it may make parents feel safer and help you get more business. For help finding the right coverage for your needs at the best possible price, consult an insurance marketplace like CoverWallet for professional assistance.