Home daycare centers are increasing in popularity thanks to its flexibility and convenience for parents. Running a daycare service out of your home has conveniences for you as well as a business owner. But there are special liability concerns you need to be aware of when you are looking after children in your home. That means you need to make sure you have the right insurance for your home daycare business.
Why Do You Need Home Daycare Insurance?
There is no bigger responsibility than taking care of children. Over the course of a day, there is a lot that can go wrong, no matter how careful you are.
If something does go wrong, however accidental, no one is going to be angrier than the parent or guardian of a child. While they might be willing to forgive or overlook mistakes made by other businesses that do not involve their kids, they will be motivated to come at you hard for any perceived wrongdoings.
Here are some examples of situations where you will be glad you have home daycare insurance:
- A child, a member of your household, a pet, or one of your employees could be injured.
- One of the children could damage your property.
- If you are transporting children in your own vehicle, there could be an accident on the road.
- An employee (or you) could be accused of mistreating one of the children.
- A parent or guardian might misunderstand something about how your business operates, and become litigious.
- You or one of your employees or another person in your home could simply make a mistake.
Also, to even meet the requirements for licensing and operating your business legally, you are going to need to make sure you get at least the minimum liability coverage.
Types of Home Daycare Insurance Policies
Now you know why you require home daycare insurance. But what types of policies do you need?
- General liability. The most critical type of insurance to get for your home daycare business is general liability insurance, a.k.a. “slip and fall” insurance. It provides protection for physical injury, property damage and personal injury (see below).
- Physical injury: If a child under your care gets hurt, physical injury coverage can help pay the associated costs.
- Property damage: If your property is damaged during the course of business, you can pay for repair or replacement using this type of coverage.
- Personal injury: This is the type of coverage that kicks in if someone injures your reputation, i.e. by posting negative feedback.
- Homeowner’s insurance. Sometimes, a home daycare insurance policy might have an add-on to protect your home. But if not, you can pay separately for homeowner’s insurance.
- Errors and omissions insurance. This type of coverage protects you if you make a mistake or if a parent or guardian makes an error interpreting your terms of service.
- Commercial auto insurance. If you ever use a vehicle to transport kids for your business, then you need commercial auto insurance.
- Corporal punishment liability insurance. This is a type of insurance that is highly specific to jobs where you work with children. Basically, if you strike a child or are accused of doing so, a parent or guardian may sue you. Corporal punishment liability insurance would then help you pay the costs. This insurance would also come into play if an employee or someone else in your home struck a child.
- Abuse and molestation liability insurance. This is another type of policy that is specifically for businesses involving children. Should a parent or guardian accuse you or someone else in the home of sexually abusing one of the children, abuse and molestation liability coverage will help with the expenses.
Remember, just because you never actually would strike or molest a child, that does not stop a vindictive parent from claiming you did it. So, all of these types of coverage are important, even if you think they do not apply.
One more thing to be aware of is home daycare insurance exclusions. Some companies will not want to insure you at all if your home environment appears to impose extra risk. Say, for example, you have a swimming pool. That would be an example of a potential issue.
How Much Does Home Daycare Insurance Cost?
Now you know what you need, but will you be able to afford it? The good news is that yes, home daycare insurance policies are generally quite affordable.
A typical price range for home daycare insurance starts out at around $200 per year and ranges as high as about $1,400 a year.
Since the cost to insure a daycare center can run as high as $3,000, that does mean that home daycares are less expensive to insure even at the upper end of the price range.
$200 a year at the lower end is very cheap. There is absolutely no reason to say no to insuring your business when you can do so for under $20 a month!
The exact cost for home daycare insurance depends on the following factors:
- Which insurance company you choose. Some companies offer significantly better deals than others. Although, that does not mean you necessarily should pick the cheapest option out there. It may be sensible to pay more for better insurance. But all things being equal, it makes sense to shop around and go with the best deal.
- What types of policies you purchase. As we just discussed, there are a number of types of policies that are smart to buy if you are operating a home daycare business. But that does not mean that you have to purchase all of them. If you just opt for daycare liability insurance, you will not be paying as much as you would if you purchased every type of coverage we discussed above. Of course, you should strongly consider getting all of them. If you are on a tight budget now just starting your business, you could always start with the bare minimum to operate legally, and then add other types of coverage as your revenue grows.
- Coverage limits. Another way to decrease the cost for home daycare insurance is to pick plans with lower coverage limits. The drawback, of course, is that if something goes catastrophically wrong, you may then be saddled with more costs out of pocket.
- Deductibles. The higher the deductible for a home daycare insurance policy, the less expensive the policy will be. Again, this can result in you needing to pay more out of pocket, this time before your policy even starts covering anything.
- Details involving your business and property. When you apply for your home daycare insurance, you will need to provide information about the property you are protecting, the size of your business, your revenue, your services, and so forth. These may impact how much you will need to pay for the insurance.
- Bundling. Insurance companies will often give you a discount if you bundle multiple policies. So, for example, if you get liability insurance and homeowner’s insurance from the same company, you could pay less than if you got the policies from different companies.
- Claim history. If you are frequently making claims, your insurance company is going to see you as a high risk customer. To protect themselves, they will raise your insurance costs. On the other hand, if you manage to avoid making claims over a period of years, you might qualify for discounts in the future since you have demonstrated that you do not pose a lot of risk to insure.
Where to Get Home Daycare Insurance Quotes
If you are ready to get the insurance you need to legally and safely run your home daycare business, click below to view quotes from top insurance companies.