You’ve decided to start a daycare as your new career. Whether you are taking care of 1 child in your home or 50 children in an outside facility, there are several things you need to consider in order to protect yourself and your business, including daycare insurance.
There are various types of daycare classifications, including In-Home Daycare, Family Daycare, Group Daycare, Adult Daycare, Drop-In Centers, and 24/7 Centers. Although the requirements and insurance vary between types, there are several common areas of concern.
Whether they operate through a franchise or out of a home, daycare centers need dependable commercial daycare insurance coverage to shield their company form risks. A proper policy can safeguard their business, and its property and assets, in the event of damage, loss, or an accident. Daycare centers are distinct from one another and have different needs and concerns when it comes to commercial insurance. An experienced independent insurance agent will outline the kinds of coverage available and assist daycare center owners in selecting a commercial insurance policy.
Because of their size, location, and style of facilities, daycare centers require various kinds of commercial insurance coverage. All require property insurance for the daycare building itself, but some may also wish to have coverage for business personal property, like furniture, machinery, and fixtures, or the personal property of others when it is on the premises of the daycare. Other daycare centers may want builders risk coverage, if they plan to expand or remodel their facilities, and some may request equipment breakdown or legal liability coverage – including professional liability. An independent insurance agent will help daycare center owners assess the commercial insurance coverage that is right for them. They can discuss issues such as molestation and abuse exclusions that are prevalent in many policies.
Most states have strict licensing requirements depending upon the number of children your business will handle. The licensing requirements tend to be more lenient for in-home daycares handling 10 or fewer children, but it is always a good idea to check with licensing departments before you take on the first child. Larger facilities require a certain number of caregivers per child, depending on the ages of the children. The number of caregivers rises with the number of infants accepted.
Home Daycare Insurance
Do you need to be insured? In order to obtain your child-care license, you may be required to show proof that you have liability insurance.
If you are handling a small number of children in your home (ex: 1-4 children), it is very possible to include additional protection on your homeowner’s insurance policy.
Please understand that coverage under a homeowners policy is limited, and probably will not include abuse and molestation coverage. Always notify your homeowner’s insurance agent when you decide to operate a business out of your home. Failure to do so may mean the insurance company will not honor a claim if they are unaware of your business.
Larger facilities, also known as group daycares, are generally located in a building other than the home. If you are renting a space for your business, most likely your landlord will request proof that you have insurance in place before letting you move in. Part of the lease agreement may also require that the landlord be included as an insured on your policy.
Commonly Asked Questions
Insurance for Home Based Daycare Centers
Q: “I operate my daycare out of my home, but I am registered as a corporation or LLC. Will my homeowner’s policy cover this?”
A: In most cases, no. You will need to purchase an insurance policy under the name of your business. Independent daycare providers that operate a center out of their home, or at another private facility, face numerous risks related to caring for children of various ages, and functioning as a business.
Their independent daycare company may be subject to liability as a result of an accident or injury to a child on the premises, or theft of a child’s personal property, or to financial loss due to damage to the daycare building or items on-site, like toys and playground equipment. In order to shield their organization from theses and other risks, in-home and other independent daycare providers should contact a local independent insurance agent to learn about purchasing quality commercial insurance coverage for their business.
Responsibility for Children
Q: “If a child gets hurt at my daycare, am I responsible?”
A: Most daycare policies include medical payments coverage. It is important that you check your policy to see if the children in your care are excluded from that coverage. It is always a good idea to regularly confirm that the child’s parent has a family health insurance plan.
Dogs and Daycares
Q: “I have a small dog that is our family pet. Do I have to tell the insurance company about this?”
A: Yes. It is always important that the insurance carrier know about any potential exposures at your daycare. Some carriers are not willing to write insurance coverage for daycares where a pet is on the premises while others will simply require that the pet be kept separated from the children while the daycare is operating.
Q: “We have a small swimming pool in the backyard. Would this be covered by insurance?”
A: It depends. Most carriers have strict underwriting guidelines as to this type of exposure. Several have a specific endorsement that would need to be added to the policy for water exposures.
Q: “I operate an adult daycare center. What type of insurance coverage do I need?”
A: Adult daycare centers operate much the same way a child daycare center does. The adult is dropped off to spend the day at the center and is then picked up in the evening. They are generally set up to provide basic care and group interaction for senior or disabled adults who cannot be left unattended while their caregiver is at their job, etc.
The insurance policies available to this type of facility are very similar to those provided to child daycare centers.
Abuse and Molestation Coverage for Daycares
Q: “How do I protect my business in case I get sued for abuse or molestation of a child?”
A: Most insurance companies provide this type of protection as optional additional coverage. Most likely, it will have what is known as a ‘sublimit’, meaning it has its own separate liability limits from the basic policy.
While coverage varies from company to company, most will protect you if you or one of your employees has been accused of abusing or molesting a child. The insurance company will step in to investigate the claim and possibly assign a lawyer to your case to handle the litigation.
Liability Limits for Daycares
Q: What should my limit of liability be?
A: You need to protect your current assets and your probable future earnings. This means planning for potential lawsuits now and in the future. When children are involved, it is important to remember that a child, in most jurisdictions, has a few years after reaching adulthood to bring a suit to court.
Whatever limit of liability you choose, it should reflect the probable inflation for the next twenty years, or so. The most important item to keep in mind is to be upfront with your insurance agent about the details of your business, the type of facility used, and any additional circumstances such as pets, pools, and play areas.
Commercial Insurance for Franchise Daycare Centers
Q: Do I still need commercial daycare insurance if I am part of a franchise?
A: Yes. Franchise daycares operate in the face of many risks. The hazards of operating a franchise daycare center range from potential liability exposure as a result of an accident or injury to a child on the premises, to an economic loss due to property damage caused by a storm, to theft of office items or equipment from the daycare facilities.
To shield their company from these and other risks inherent in running their business and caring for children, franchise daycare owners should contact a trusted local independent insurance agent to learn about purchasing commercial insurance coverage they can rely on in case of the unexpected.
Insurance needs and laws are complex. Coverage varies wildly from company to company. Laws are vastly different from state to state. Your independent agent knows the laws and companies that provide coverage options. The bottom line: Don’t try to handle your insurance without an agent you trust.
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Enhanced Insurance is not written by attorneys. If you’re looking for legal advice, you need to contact a lawyer. Further, insurance practices and forms change constantly and are varied from state to state. For definitive answers in your area, contact a local agent.
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