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What You Need to Know About Home Daycare Insurance
If you’re a home daycare operator looking to enhance and protect your business from everyday life risks, this post is for you. Some common risks your business faces include slips and falls, ingestion of toxic substances, abuse accusations, faulty play equipment causing injuries, and more. When these risks occur, they may cost your business various financial and reputational damages such as lawsuits, penalties, loss of clients, etc.
Good news: you can mitigate these risks by taking out home daycare insurance. What is it, what are the available types, and how can it benefit your business? Please keep scrolling for these and more insights regarding home child care insurance! We’ll also answer a few questions that we suspect will be top of mind at the end of this resource.
What is Home Daycare Insurance? Do You Need it?
Home daycare or childcare insurance is a tailor-made policy that covers your liability if anything happens to those under your care. In other words, it protects caregivers from the unique risks your at-home daycare business may face.
In most instances, it usually comes as an add-on to your homeowner’s insurance policy. That means it extends the coverage of your liability to the children under your care. But that’s not usually explicitly automatic, so you want to check with your insurance company to confirm that your homeowner’s policy is all-inclusive.
So, do you need a home childcare insurance policy to protect your business and those under your care? Downright, YES! As we’ve mentioned above, there’s no guarantee that the standard homeowner’s policy will cover your at-home daycare. That means if your business were to get sued (for the reasons earlier mentioned), you’d have to dig into your personal assets like savings and home to offset the charges. And you don’t want that happening, do you?
Thus, it’s paramount that you consider going for home daycare insurance coverage tailored for your business of six or fewer children. However, if you have more than six children under your care, you should opt for a commercial policy, as it’s more extensive and comes with broader coverage solutions for your daycare.
The Three Types of Home Daycare Insurance
When in the market for home childcare insurance, there are three distinct options you can choose from, depending on your coverage needs. These include:
- Liability insurance
- Homeowner’s insurance
- Errors & omissions insurance
From the daycare business perspective, general liability is better known as “slip and fall” insurance. It protects your business should anyone get injured within its perimeters, and it covers the following damages/injuries:
- Property Damage. The smooth operation of a daycare business needs equipment and supplies like furniture, computer, water, toys, etc. However, such property aren’t immune to damages due to natural occurrences, vandalism, falling objects, among other causes. So home daycare liability insurance saves you from the repair or replacement expenses by covering the costs when a risk occurs.
- Personal Injury. As a home daycare operator, you always bear the risk of reputational damage, aka personal injury, from dissatisfied clients, ill-intended competitors, social media users, and more. And the effects can be far-reaching, including loss of clients, lawsuits, difficulty in hiring and retaining the best talents, etc. Thankfully, general liability insurance protects your business from unexpected setbacks due to personal injury.
- Physical Injury. If a child under your care picks up an injury while playing, the chances are that you’ll bear the liability. It doesn’t matter whether you were supervising the activity or you can prove that the equipment was safe; you could still be potentially held responsible for the damages. But that’s not a worry if you have home daycare liability insurance, as you won’t incur any out-of-pocket costs.
It’s a natural call to want to protect your home against theft of possessions, personal liability for harm to others, property damage, among other risks. But running an in-home daycare gives even more reasons to go for homeowner’s insurance due to the risky nature of the business.
As we mentioned earlier, some homeowner’s insurance policies encompass home daycare liabilities. So you’ll be lucky if your insurer provides that add-on benefit. If not, you’ll need to purchase a standalone homeowner’s insurance, which covers such risks as vandalism, theft, property damage, fire, and more. Further, the policy also assumes liability if children or employees get injured within the perimeters of your home daycare.
Errors and Omissions Insurance
Variously referred to as professional liability insurance or malpractice insurance, errors & omissions (E+O) is a must-have coverage if you wish to run your in-home daycare trouble-free. The policy comes in handy in protecting you or your employees against negligent claims by your clients.
As they say, to err is human, and it’s not uncommon for you (or your employee) to make a mistake or for the parent to understand your terms of service, providing grounds for legal action. So the E+O insurance comes to your rescue when your business gets sued by covering all the defense costs.
Daycare Insurance Cost
As every home childcare business is unique, insurance costs also vary depending on individual needs like the preferred amount or type of coverage. But basically, you can expect to pay an annual insurance cost of between $450 and $1,350 for your in-home daycare business. On the flip side, if you run a commercial daycare center, you may incur $1,000-$3,500 in annual insurance premiums.
But how do insurance carriers settle on these figures when setting the premiums? Here are some factors regarding the coverage details and business characteristics that insurers consider when setting their rates:
The more daycare staff you have, the more you’re likely to pay for coverage. That’s because workers’ compensation rates are usually partially based on payroll. Furthermore, employees bear an element of liability risk, so you may have to dig deeper into your pockets to afford the errors and omissions insurance.
The more your home daycare business rakes in revenue, the higher the premiums you’ll pay. Home daycare insurance companies usually presume that if your business earns more money, you have more to lose; thus, you may be more likely to get sued.
It’s a rule of thumb; the higher the deductibles, the lower the insurance premium, and the reverse is true. But here’s the catch; your daycare business will have to pay more if you end up filing a claim. So although deductibles may save you money, it all depends on how often you make a claim.
Insurance companies are businesses like any other, and they need to maintain a healthy profit margin to continue operating. However, that’s a feat they can only realize if their clients file fewer claims. The point is, if you have a track record of filing multiple claims, you’ll have to pay higher premiums.
Like most other insurance products, home daycare insurance comes with various coverage limits, and the higher you go, the more it’ll cost you. That’s because, with higher coverage limits, the carrier has to compensate you more if you file a claim.
Home Daycare Insurance FAQs
Is it a must to get home childcare insurance?
In a word, YES! Most states have made it mandatory for in-home daycare businesses to have liability insurance as a prerequisite for fulfilling licensure requirements. So if you’re a small business of six or fewer children and you’re looking to operate without any legal implications, you should go for home daycare insurance.
What’s covered under errors and omissions insurance?
Errors and omissions insurance covers expenses if you or your employees get sued for oversights or mistakes. For instance, if a child gets injured while playing because you weren’t keen on supervision, the policy will cover the lawsuit expenses.
Where can I buy home daycare insurance?
Home daycare policies are pretty unique and rarely do the standard homeowner’s insurance providers offer them. So you may have to look elsewhere for the best in-home daycare insurance cover. Some of the most reliable providers include American Family, Markel, Next Insurance, CoverWallet, Assure Child Care, and JMG Insurance Agency.
Protect Your Practice with Home Daycare Insurance!
Let’s face it; as a business owner, you must bear risks like accidents, theft, vandalism, property damage, workplace injuries, and so on. And a home daycare is no exception. When these risks occur, you may either get knocked down by the damage and cease operations or pick yourself up and continue as if nothing happened. It all depends on how well you’ve prepared for the unknown. Having proper home childcare coverage beforehand gives you peace of mind, knowing that you’ll be able to get right back on track should an unfortunate event occur.
Are you a parent searching for the best in-home daycare for your child? Or perhaps you’re an educator looking to set up your daycare or preschool? Either way, Wonderschool can help! We’re a mission-driven company that provides a first-class platform and resources that empower educators and care providers to run their daycare businesses efficiently and profitably while delivering top-notch services.
At Wonderschool, we have one goal: ensure every child has access to quality childcare necessary for their growth. So join us today, and let us accomplish this goal together!