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Home Daycare Liability Insurance: Cost & Coverage 

Caring for other people’s children is a huge responsibility. Whether you run a daycare out of your home or in a commercial space, there’s always the chance of a child being injured and property getting damaged. Daycare liability insurance provides financial protection from work-related injuries and accidents and resulting lawsuits.

This article explains what you need to know to get liability insurance protection — along with other coverage — for your daycare operation.

What types of liability insurance coverage do home daycare businesses need?

Home daycare businesses typically secure the following two types of liability insurance coverage:

1. General liability insurance for home daycare businesses 

General liability insurance covers primary daycare business risks, including accidental injuries that happen on your business property, which are common occurrences at daycare centers. It also pays for damage to other people’s property while conducting business, for instance, harm to a parent’s computer because you knock her bag over while picking up a child.

General liability insurance pays for:

  • Medical care for injuries that happen at your daycare center and the area around it to others (non-employees) and associated legal costs and settlements.
  • Repair and replacement of damage you or your employees cause to other people’s property while conducting business and related legal and settlement costs.
  • Libel and slander lawsuits if you’re sued because you say or write something offensive or untrue about a competitor.

Tip: It’s often easier and cheaper to bundle general liability insurance with property coverage in a business owner’s policy (BOP). A BOP also makes it simpler for daycare providers to get the other types of insurance protection they need.

2. Professional liability insurance for home daycare businesses 

This coverage is also called errors and omissions (E&O) insurance. It covers legal defense and settlement costs if you’re sued over a mistake or misjudgment, such as not providing adequate supervision that results in an injury. Professional liability insurance can help pay for:

  • Legal and settlement costs when you’re sued over an injury a parent believes you could have prevented had you demonstrated better professional judgment.
  • Legal, repair, and replacement costs if you’re sued over property damage that happened because you or an employee didn’t take reasonable care to protect the property.
  • Costs to make things right when something goes wrong because you or an employee provides bad advice or doesn’t show adequate professionalism.

What other types of insurance do daycare centers get?

Here are some common coverages many daycare centers purchase.

Directors and Officers (D&O) Insurance for daycare centers 

This coverage is sometimes considered a part of the liability insurance family. It covers legal expenses for daycare center directors and leaders if they’re sued over a business decision they made on behalf of a childcare business that resulted in negative consequences. Some examples include:

  • Accusations of mismanaged funds
  • Failure to meet regulatory standards
  • Failure to perform official duties.

An experienced business insurance agent or company representative can help you identify the proper liability insurance protection for your daycare operation at a price you can afford.

Business Owners Policy (BOP) for daycare centers 

A BOP bundles general liability and property insurance (and sometimes lost income coverage) in a single plan. A BOP is often the most cost-effective way to get these coverages and easily add others you may need.

Workers’ compensation insurance for daycare centers 

Most states require workers’ comp for childcare centers that have employees. It provides benefits if you or an employee becomes ill or is injured for work-related reasons, something that’s common in the rough-and-tumble world of daycare. It can pay for healthcare expenses, lost wages, disability, job retraining, death benefits, and more. It also protects sole proprietor childcare workers from work-related injury and illness costs that health insurance might deny.

Commercial auto insurance for daycare centers 

If you drive personal or company-owned vehicles for business reasons, you’ll likely need commercial vehicle insurance. This is particularly true if you own vans and other vehicles to transport kids. Even if you drive your own car to pick up daycare supplies, you need commercial auto coverage because your personal car policy won’t cover you if you’re involved in an accident or other incident because you were using it for work. Depending on the coverage you get, this insurance can help pay for accident-related injuries and property damage, along with harm resulting from extreme weather, vandalism, and theft.

How much does home daycare liability insurance cost?

The average cost of daycare liability insurance for home daycare businesses is $70 per month, or $840 per year. This is for both general liability and professional liability insurance policies for an average home daycare business. 

Below are the average costs of each liability policy: 

Home daycare liability insurance coverageAverage costs
General liability insurance $50 per month
Professional liability insurance$20 per month

These are just the averages. Your rates will be different. Be sure to shop around with a few companies or work with a broker like InsurePro, Simply Business, or CoverWallet to compare several quotes to find the cheapest one for you home daycare business.

What affects home daycare liability insurance cost?

The home daycare liability insurance costs vary and are dependent on many factors, including the size of the operation, number of children cared for, equipment and other assets, coverages and levels, whether it’s home-based or run out of a more prominent rented location, number of children cared for, hours open, staff experience, claims made on insurance policies, how the insurer calculates premium costs and more. 

Here are some general guidelines:

  • All things being equal, a home daycare center will pay less for insurance than a larger business.
  • Operations that offer enhanced services such as sports programs or field trips can expect to pay more than those that do not.
  • A bigger number of children supervised will result in higher premium prices.
  • If you have employees, you’ll pay more for coverage.
  • If you have a seasoned professional staff with clean records, you’ll have lower insurance costs than if you hire newbies or compromised staff members.

What’s critical is that you get several daycare liability quotes from different agents, insurance companies, and other providers. Then compare coverages and costs to get the best policy to cover your daycare operation’s risks.

Best home daycare insurance companies

If you are looking for business insurance coverage for your home daycare business, we have researched more than 30 companies offering such coverage, and recommend the top providers of daycare insurance for your consideration.

To find cheap home daycare liability coverage, you should at least shop around with a few companies or work with a broker like Simply Business or CoverWallet to compare several quotes to find the cheapest one for your home daycare business.

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