If you are in the process of starting a daycare business, you may have already discovered that starting a business of any type can be a lot of work. There are many questions that do not seem to have clear answers. However, the question of whether or not to obtain daycare business insurance is an easy answer and we will walk you through why.
Yes, you absolutely need daycare business insurance. In fact, you need to consider multiple types of insurance – liability insurance, property insurance, and specialized coverage. Insurance can be obtained through an independent insurance agent or providers who will compare multiple company policies for you.
Car, health, and life insurance can be a complicated aspect of all of our lives, but business insurance does not need to be that way. In fact, once you have secured the proper daycare business insurance for your particular center, it should be one of the most comforting features of your new business.
What is Daycare Business Insurance?
As with most types of insurance, daycare business insurance is financial coverage that protects you against potential situations that no one wants to imagine. Some of these protections are helpful for any type of business and others are specific to the industry of child care. Because you will be interacting with people, property, customers, and employees, there are a number of problems that can arise that could leave you with more costs than you are able to pay for. It is important to protect yourself ahead of time in case something goes wrong in the future.
Are You Sure I Really Need Daycare Business Insurance?
If you care for children, yes.
Most states will require some sort of insurance for your daycare center. Be sure to look at your state government’s website to make sure you are legal. Do a quick search on the National Database of Child Care Licensing Regulationswhile you are at it to ensure you have all other required licenses as needed.
Even if no one is forcing your hand to sign up for these policies before you can open your doors, it is really in your best interest to purchase the necessary insurance to cover yourself from liability.
In case we were not clear enough already, you need daycare business insurance even if:
- You are a religious or nonprofit entity
- You are an independent child care center
- You are a franchise child care center
- You are a Montessori school serving young children through Kindergarten
- You care for children before or after school
- You are a Summer day camp
- You are a preschool
What About In-Home Child Care?
Yes, even in-home child care businesses will need to look closely into their personal insurance policies Often, people expect their regular policies will cover them from everything that could go wrong, but this is not the case. Sit down with your insurance agent to make sure there are no caveats in your personal policy about running a business. If there are, add on the necessary coverage to protect you and your business.
Insurance You Will Remember and Insurance You Will Forget
There are many different types of insurance available for your daycare business. Some of them, all child care centers should have. Other options may be more specific to your particular arrangement and not required for all centers. While your main liability or property insurance may be a bit more costly, most additional policies only cost a few extra dollars a month and are well worth it if you ever find yourself in trouble.
Before you become overwhelmed with the below list, remember that you can personalize these policies to your needs so that you are getting the exact coverage that you need, without over-paying.
Here are some options you should consider:
General Liability Insurance
This will help you with legal fees if you are sued by a third party for property damage or injury while at your business. This is especially important because you are inviting children onto your property on a regular basis.
Be sure your policy includes building coverage, contents coverage, and outdoor equipment coverage. This protects you against a number of weather-related events as well as theft or fire.
Professional Liability Insurance
This protects your business in the case that you or your staff are sued due to negligence. This is especially important in case a parent blames your business for not doing enough for their child’s development, even if it wasn’t completely your responsibility to do so.
Workers’ Compensation Insurance
If you have employees, this insurance provides medical coverage for staff that are hurt while working. This can be anything from an injury sustained from a fall to a sickness incurred while working with the children. Some states will require this coverage.
Abuse and Molestation Coverage
No one wants to think about these situations becoming a reality, but if an employee is accused of or is abusing a child, you will want this insurance to protect your business from ruin. Costs associated with abuse and molestation charges may include legal fees, fines, and medical bills.
Corporal Punishment Liability
Again, insurance protects against risks you hope will never become reality. If one of your staff members hits a child, your business will be under financial distress. This insurance protects your business from a terrible situation turning into one that ends your business.
This policy adds additional coverage beyond your regular insurance limits. This is especially important for larger child care centers to consider.
Commercial Auto Liability Insurance
If you have company vehicles, you will need this insurance in case of an accident. This is another policy that is required in most states.
On that note, if you are driving personal vehicles for business purposes, you should also talk to your provider or agent about commercial auto liability insurance. It is important to be protected in all circumstances, especially when transporting children.
Non-Owned or For-Hire Auto Liability
Non-owned auto liability insurance is important in the case of a staff member getting into an accident when running a business errand with a personal vehicle.
For-hire auto liability insurance may be necessary if you are renting a vehicle for company work.
Field Trip Insurance
This will be important if you decide to take your children away from your place of business for a trip. Trips may be once and done or daily – either way, they need to be covered.
Lost Income Coverage
If you are temporarily shut down due to a covered issue, this will make it possible for you to pay your staff and monthly expenses.
Special Event Insurance
If you are planning a larger one-time event for your child care center, check with your insurance provider to see if you need to consider special event insurance for extra liability coverage.
Where Do I Find All of This Insurance?
It will be important for you to find an insurance provider that understands the business of daycare center operation. Not all insurance agents are trained in this profession. You will likely find quite a few options with a simple Google search for “daycare business insurance agents near me.” Contact a few companies who seem trustworthy to you and compare their rates before jumping in.
If you’d prefer assistance in that process, there are companies that will look into multiple policy options and build a custom quote to your needs. Consider scheduling a call with CoverWallet or CoverHound to learn more about your options.
How much is daycare business insurance going to cost me?
As discussed in the main article, there are many variables to consider when purchasing insurance for your daycare business.
Will you take field trips?
Will you have employees?
Will you have company vehicles?
Each of these answers (and more!) affect the type of insurance you need to protect your business. Because of this, it is difficult to give a clear answer of what you will pay.
However, looking at some example policy costs as well as insurance costs other child care centers have experienced should give you a glimpse into what your costs may look like. Consider contacting other centers in your state, but not necessarily your immediate area, to determine what their monthly payments look like. You can also call a few insurance companies and review the various options presented to you to determine what will make the most sense for your particular arrangement.
How Can I Protect Myself From Liability Even Further?
To protect yourself from liability even further, you can choose a business entity that separates you from your business. This may involve turning your sole proprietorship endeavor into a limited liability company, corporation, or other type of legal entity that allows for additional protection.
How Can I Best Protect My Students and Employees at Daycare?
Besides following the basic rules to operate your child care center, consider going above and beyond by childproofing your space. Hire enough staff to care for the children, train them in first aid thoroughly, block off stairs and other potential dangers, clean all spaces frequently, lock up toxic substances, and check for broken equipment and hazards regularly.
Please note: This blog post is for educational purposes only and does not constitute legal advice. Please consult a legal expert to address your specific needs.
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