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I would say that if you are a new program that you should definitely jump on brightwheel and just experience it. It’s tools that help make your life easier as the owner and director. There’s no reason not to, with the cost and the effectiveness, it’s 100% a yes for me.” Crystal D., Owner & Director at Lil’ Ranch Hands Family Childcare Home in Minco, OK
As I build my new program, the billing features are a game changer. I can easily invoice parents, and everything is automatically tracked—especially helpful come tax season.” Emily K., Owner of Emily Finzen Childcare in Lake Benton, MN
Experience Curriculum allows you to lean into creativity while following the curriculum. It’s all right there, it’s all prepared for you, and then you can lean into it.” Leinani G., Owner of Creative Minds Learning Academy in Bothell, WA
Brightwheel helps us in every way possible. From their onboarding and support team to the features that keep us organized, on track with planning, and communicating smoothly as a team to parents and each other. I couldn't imagine a better management system for our program." Harida H., Administrator at Play Pals Daycare in Maumee, OH
Why home daycare insurance matters
Childcare-related liability claims can be costly, with some incidents resulting in significant financial impacts.
Consider these common scenarios that could affect your home daycare: A child falls down your stairs and breaks their arm. A family alleges their child was improperly supervised during outdoor play. Kitchen equipment malfunctions and causes a small fire that damages your home and daycare supplies.
Without adequate home daycare insurance, these situations could result in expensive lawsuits, medical bills, and property damage costs that threaten your financial stability. The right coverage transforms these potential disasters into manageable insurance claims.
Three types of home daycare insurance
For daycare business owners, understanding the key aspects of home daycare insurance is crucial for ensuring adequate protection and mitigating potential risks. Here are three types of home daycare insurance to consider:
Homeowners insurance for home daycares
Standard homeowners insurance rarely covers business activities conducted in your home. Most policies explicitly exclude coverage for commercial activities, which includes running a daycare.
Some insurance companies offer homeowners insurance endorsements or riders that extend coverage to include home-based childcare.
However, homeowners insurance with a daycare endorsement may not be sufficient for full-time childcare providers. The coverage limits are often too low, and many business-related risks remain excluded.
When standard homeowners insurance isn't enough:
- You care for more than 3-4 children regularly
- You have employees helping with your childcare program
- You operate your daycare for more than 20 hours per week
- Your state requires specific commercial coverage levels
Liability insurance
General liability insurance forms the foundation of most home daycare insurance policies. This coverage protects you when children, families, or visitors are injured on your property or when you accidentally damage someone else's property.
- Bodily injury protection covers medical expenses and legal costs if a child is hurt while in your care. Common claims include playground injuries, burns from kitchen equipment, or accidents during indoor activities.
- Property damage protection helps pay for repairs if children damage items belonging to others. For example, if a child breaks a neighbor's window with a ball from your backyard, this coverage helps pay for the replacement.
- Professional liability (errors and omissions) insurance protects against claims of negligence or failure to provide adequate supervision. This coverage is crucial when families allege that your care fell short of professional standards.
- Workers' compensation becomes necessary when you hire employees to help run your home daycare. This coverage covers medical expenses for work-related injuries and replaces lost wages during recovery periods. It also protects you from employee lawsuits.
Business property insurance
Your daycare equipment, supplies, and modifications to your home represent a significant investment. Business property insurance covers these items when they're damaged by covered perils like fire, theft, or vandalism.
This coverage typically includes:
- Playground equipment and outdoor toys
- Educational materials and books
- Kitchen appliances used for meal preparation
- Computers and administrative equipment
- Modifications made to accommodate your daycare
Unlike standard homeowners insurance, business property coverage accounts for the higher replacement costs of commercial-grade equipment and the specialized nature of childcare supplies.
Income and Expense Worksheet
Use this worksheet to track your finances, make smarter spending decisions, and create a monthly budget.
How much should you spend on home daycare insurance?
The cost of home daycare insurance varies based on several factors, but understanding typical price ranges helps you budget appropriately.
|
Insurance Type |
Average Annual Cost |
What It Covers |
|---|---|---|
|
$450-$2,000 |
Injuries, property damage, legal costs |
|
|
$750-$1,200 |
Negligence claims, professional mistakes |
|
|
$500-$900 |
Equipment, supplies, property damage |
Factors that influence your insurance costs
- Your location significantly impacts premium costs. Urban areas with higher lawsuit rates typically see higher premiums than rural locations. States with strict licensing requirements may also have higher insurance costs.
- Number of children in your care directly affects your risk exposure. Providers caring for 2-3 children pay less than those with 10+ children in their programs.
- Your experience level matters to insurance companies. Providers with clean claims histories and formal childcare training often qualify for lower rates.
- Coverage limits you choose determine both your protection level and premium costs. Higher coverage limits provide better protection but cost more upfront.
- Deductible amounts affect your annual premiums. Choosing higher deductibles typically lowers your monthly costs but increases your out-of-pocket expenses when filing claims.
Planning your insurance budget
Most home daycare providers should budget 3-5% of their annual revenue for insurance costs. For a provider earning $30,000 annually, this translates to $900-$1,500 in insurance expenses.
Consider your risk tolerance and financial capacity when selecting coverage levels. While comprehensive coverage costs more initially, it protects against expenses that could otherwise force you to close your childcare program.
How to choose the right insurance provider
Finding the right insurance provider for your home daycare requires research and comparison. Follow these steps to make an informed decision:
Verify provider specialization
Choose insurers experienced in home daycare coverage. Companies that understand the childcare industry can better assess your risks and provide appropriate coverage options.
Ask potential providers about their experience with childcare-related claims. How quickly do they process claims? Do they understand state licensing requirements? Can they provide references from other home daycare providers?
Compare multiple quotes
Request quotes from at least three different providers to ensure competitive pricing. Make sure each quote includes similar coverage limits and deductibles for accurate comparison.
Ask for itemized breakdowns showing exactly what each policy covers. Some providers offer bundle discounts when you combine multiple coverage types, which can provide significant savings.
Research provider reputation
Check ratings on independent review sites like AM Best or Standard & Poor's to verify the financial strength of insurance companies. You want a provider that will be financially stable when you need to file a claim.
Ask fellow childcare providers for recommendations. Local childcare associations or online forums can provide valuable insights into which insurers provide good service and fair claims handling.
Review policy details carefully
Understand what's NOT covered in each policy. Common exclusions might include certain activities, specific types of equipment, or incidents occurring off your property.
Pay attention to coverage limits and how they apply. Some policies have per-incident limits while others have annual aggregate limits that could affect large claims.
Assess ongoing support
Evaluate the quality of customer service each provider offers. Can you easily reach a representative when you have questions? Do they provide resources to help you prevent claims?
Ask about policy adjustment processes. As your daycare grows or changes, you'll need to modify your coverage accordingly.
Consider working with an insurance broker who specializes in childcare businesses. They can help you navigate options and find the best coverage for your specific situation while potentially saving you time and money.
Safeguard yourself and your business with home daycare insurance
Securing proper home daycare insurance isn't just about meeting state requirements—it's about protecting your business, your assets, and your peace of mind. Start by evaluating your specific risks, comparing quotes from specialized providers, and choosing coverage that can grow with your childcare program.
The investment in comprehensive insurance coverage pays for itself the first time you need to file a claim. Don't wait until an incident occurs to discover gaps in your protection.
