Running a daycare or a home-based childcare business can be an incredibly fulfilling and rewarding occupation. You help working parents take care of their children while they are building their careers or taking some of that much needed time for themselves. 

However, looking after other people’s children comes with a lot of responsibility. Parents put a lot of trust in you and in return expect superb service. 

Even a small incident or scratch might give enough cause for a parent or guardian to file a claim against your business. If a lawsuit follows, you can face costly legal fees and a blow to your reputation. 

To avoid serious financial trouble, you can get daycare insurance. This article will explain the purpose and coverage of daycare insurance and who needs it. You will also find some tips for saving money on insurance at the end of the article.

What is Daycare Insurance?

Daycare insurance, otherwise known as childcare insurance, is designed to cover the needs of small and at-home daycare providers. Businesses who can get coverage include:

• Licensed child care centers
• Preschools
• Kindergartens
• Before- and after-school programs

The most typical things covered by daycare insurance are liability issues such as damage to someone’s personal belongings or someone getting injured on your property. It provides small business owners with coverage for any liability issues that may occur. Some policies also cover property damage to the premises used by your business

Do you need daycare insurance?

Most states require child care centers to be licensed. To be licensed by the Department of Health and Human Services (DHHS), childcare centers and nursery schools need to have daycare liability insurance. Only home-based daycare businesses are not required to carry liability insurance. Even if not required by law, getting coverage will not be for nothing, especially since home insurance policy probably does not cover home-based daycare businesses. 

Additionally, do not forget about all the risks involved. Children are unpredictable and so are their parents. You might be faced with claims and accusations without expecting it. You should also protect your business from the risks of fire, natural disasters, and other events that could cause great financial distress.

What Does Daycare Insurance Cover?

Daycare insurance packages can vary between individual insurance companies.  Furthermore, different childcare businesses have distinct needs, which is why the insurance policy needs to be tailored to the unique needs of your business. In general, this is what daycare insurance consists of:

• General liability – Considering how active, curious, and reckless children can be, it is no surprise that they also hurt themselves every now and then. Although injuries are usually minor, you are still liable. This policy provides coverage for any claims of bodily injuries that happened on your premise. Additionally, it covers you when a third party sues you for damaging their belongings on your property. 
• Professional liability – If either you or a member of your staff is accused of negligence to a child’s needs and safety, you might be in for a lawsuit. Whether you did something wrong or not, this coverage will cover the legal fees, defense costs, and any settlement payouts.
• Property insurance – Whether you own or rent the rooms or building, insurance helps you protect the building and your equipment. This can cover losses from events like fire, vandalism, burglaries, and other situations that are out of your control. Your policy will specify which events are and which ones are not covered.
• Accident medical – Covers children’s medical bills if they are injured on your premises and either do not have their own insurance or the insurance does not cover all their bills.
• Commercial auto insurance – If you run a vehicle as part of the business, such as a van for field trips, you will need commercial auto insurance. Most states require it by law. It covers bodily injury to you, your passengers, and other people involved in the accident, and damage to your vehicle and someone else’s property. 
• Umbrella liability insurance – If you feel the limits of your coverage are inadequate and that you might go over them, extend your insurance with the umbrella insurance. Large daycare businesses will benefit from additional coverage.

However, depending on your business needs, you might want to omit something or get some additional coverage. Before you meet with an insurance agent or purchase coverage, analyze your business situation and evaluate the risks, so you could better assess whether the package offered to you is adequate enough. 

How to Save Money on Daycare Insurance?

When purchasing insurance, the entire idea is to save money in the long run, because you never know when you might be involved in a lawsuit or have to cover losses after a natural disaster. However, you can also save money on the policy itself. Consider these tips:

• Follow safety precautions – It probably goes without saying that safety is a daycare's number one priority. The more safety precautions you take and safety equipment install, the lower the risk of someone getting hurt. Lower risk can also lead to lower insurance rates.
• Meticulously screen employees – Complete background checks are essential when hiring new employees. Any history of violent or dangerous behavior is an immediate red flag. 
• Pay in full – Most insurance policies will give you a discounted rate if you pay for your policy in full, rather than in monthly installments.
• Bundle up – If you purchase multiple policies or already have insurance for other things, consider going with the same insurance company. Many offer bundle discounts when combining insurance policies into one package.
• Shop around – Each insurance company calculates their clients’ risks differently. It is useful to get quotes from multiple agencies to find the best deal on the market.
• Train your staff – Regularly train your staff on the appropriate behavior and procedures. Give all of your employees a handbook that establishes the company’s norms and gives them clear instructions to follow.

Being a business owner is exciting, but also stressful. However, insurance can reduce some of your worries. If you would like to discuss your options with an insurance expert, send us an email, give us a call, or just fill out the free quote form on our website.