How much does daycare insurance cost?
How much does daycare insurance cost?
$1,000 – $2,500 average total cost per year (home daycare)
$3,000 – $15,000+ average total cost per year (daycare center)
Daycare insurance cost
Daycare insurance costs $400 to $1,500 per year on average for basic liability coverage for an in-home daycare. Commercial daycare insurance costs $1,100 to $4,000+ per year for general liability coverage. Larger daycare centers often pay significantly more. Your total childcare insurance cost depends on the state's requirements and your daycare's size and services.
| Daycare type | Average cost per month | Average cost per year* |
|---|---|---|
| Home daycare | $35 – $125 | $400 – $1,500 |
| Daycare center | $90 – $330 | $1,100 – $4,000+ |
*For general liability insurance
Home daycare
Home daycare insurance costs $400 to $1,500 annually for basic liability coverage. This lower cost reflects the smaller scale of operations and reduced liability exposure compared to commercial childcare centers.
Most home daycare providers start with general liability coverage, which protects against accidents and injuries. The exact cost depends on how many children you care for, your location, and whether you have employees. States with a higher cost of living and more litigation tend to have higher premiums.
Commercial daycare center
Commercial daycare center insurance costs $1,100 to $4,000+ annually for general liability insurance. Insurance for daycare centers costs more than home-based daycare insurance due to the increased risks of larger and more complex operations, more children, and additional staff.
Daycare centers often need multiple coverage types beyond basic liability, including workers' compensation, commercial property, and professional liability insurance. These additional coverages can substantially increase total annual costs.
Childcare insurance types and costs
Different policies help protect against specific risks your daycare business may face. Insurers often offer comprehensive packages that include two or more types of coverage, with home daycares spending $1,000 to $2,500 annually on average. Most commercial daycare centers pay $3,000 to $15,000+ annually, depending on the size and location.
The table below outlines common daycare insurance types and their average costs.
| Insurance type | Home daycare annual cost | Daycare center annual cost |
|---|---|---|
| General liability (GL) | $400 – $1,500 | $1,100 – $4,000+ |
| Professional liability | $300 – $1,200 | $750 – $3,500 |
| Property insurance | $300 – $700 | $500 – $1,200+ |
| Workers' compensation (scales with payroll) |
$0 – $1,400+ | $2,500 – $7,000+ |
| Abuse & molestation | $200 – $600 (may be included in GL) |
$200 – $800+ |
| Commercial umbrella | $300 – $500 | $500 – $2,000 |
| Estimated annual range* | $1,000 – $2,500 | $3,000 – $15,000+ |
*Typical range for a comprehensive daycare insurance package
Daycare liability insurance cost
Liability insurance is essential for protecting your daycare from claims of injury or property damage. General liability covers accidents on your premises, while professional liability addresses claims of negligence or errors in supervision.
General liability coverage costs $400 to $4,000+ per year.
Professional liability coverage costs $300 to $3,500 per year.
These policies are the foundation of most daycare insurance packages and help shield your business from financial loss due to lawsuits, medical bills, or legal fees.
Daycare property insurance cost
Daycare property insurance costs $300 to $1,200+ per year and protects your daycare's building, equipment, and supplies from risks like fire, theft, or natural disasters. This coverage is important for both home-based and commercial centers, especially if you've invested in specialized play equipment or learning materials. The cost depends on the value of your property and the level of coverage you select.
Having property insurance means you can repair or replace damaged items without a major financial setback. This type of coverage helps you keep your daycare running smoothly, even after unexpected events.
For home-based providers, standard homeowners insurance often excludes business activities, making separate commercial property coverage necessary to protect your daycare equipment and liability.
Daycare workers' comp insurance cost
Workers' compensation insurance costs $1 to $2+ per $100 of payroll for daycare providers and covers medical expenses and lost wages if an employee is injured on the job. If you have staff, most states require this coverage by law. The exact cost varies based on the number of employees and your claims history, but it's a vital safeguard for both your team and your business.
By providing workers' comp, you demonstrate care for your employees and protect your daycare from costly lawsuits. It's an important part of running a responsible and secure childcare operation.
Daycare abuse and molestation insurance cost
Abuse and molestation insurance costs $200 to $800 per year, though it's sometimes included in general liability policies for in-home daycares. This coverage provides essential protection against allegations of physical, emotional, or sexual abuse by you or your employees. It handles legal defense costs, settlements, and judgments related to abuse allegations, regardless of whether the claims have merit.
Many general liability policies exclude abuse claims, making separate coverage necessary. This protection becomes particularly important as your daycare grows and you hire employees, as even false accusations can destroy your business reputation and result in enormous legal expenses that could bankrupt your operation.
Additional coverage types
Several optional coverages provide important protection for specific daycare risks and situations.
Medical accident: Medical accident insurance costs $200 to $600 per year and covers children’s medical expenses for minor injuries, regardless of fault, including ER visits, diagnostic tests, and follow-up care. This coverage helps avoid liability disputes and maintains trust with parents.
Commercial auto: Commercial auto insurance costs $1,000 to $4,000+ per year and is required if you transport children or use vehicles for daycare business, providing higher liability limits and covering business use that personal auto policies exclude.
Crime: This insurance adds $300 to $800 per year and protects against employee theft, forgery, and other crimes involving money, supplies, or equipment. This coverage becomes more important as your daycare grows or handles more cash.
Commercial umbrella: Umbrella insurance provides additional liability coverage above your primary policy limits, costing $300 to $600+ annually for most daycare operations. Umbrella coverage becomes essential when facing large lawsuits that exceed your general liability limits.
Factors that affect daycare insurance cost
Multiple factors influence your daycare insurance premiums:
Location: Urban areas or regions with higher rates of claims leading to higher insurance costs.
Size: Larger facilities with more children have higher premiums, due to greater exposure to accidents and potential claims.
Employees: The more employees you have, the higher your premiums.
Children ages: Caring for infants raises rates due to higher supervision needs; mixed-age programs may balance risks.
Services offered: Offering transportation, field trips, or swimming increases premiums; specialized care for children with disabilities can also affect rates.
Annual revenue: Higher revenue often results in higher premiums, reflecting greater risk.
Claims history: A history of claims raises premiums, while a clean record can earn discounts.
Deductible: A higher deductible lowers your premium, while a lower deductible increases it. The deductible is the amount you agree to pay out-of-pocket before insurance coverage begins.
Discounts:
Facilities with security systems, fencing, and safety procedures may qualify for discounts.
Insurers often offer discounts for risk management practices like staff training, safety equipment, or a claim-free record.
Bundling multiple policies with one provider can reduce costs.
FAQs about daycare insurance
What insurance is needed to open a child daycare?
Most states require general liability insurance as a condition of licensing, with minimum coverage amounts varying by state. Beyond state requirements, you'll need workers' compensation if you have employees, commercial auto insurance if you transport children, and property insurance if you own or lease a facility. Professional liability insurance, while not always required, provides important protection against negligence claims.
Does homeowner's insurance cover home daycare?
Standard homeowner's insurance policies do not cover business activities, including home daycare operations. You'll need to add a home daycare endorsement to your homeowner's policy or purchase separate business insurance. Without proper coverage, your personal assets could be at risk if someone sues your daycare business.
How much liability insurance do I need for my daycare?
Most experts recommend $1 million per occurrence and $2 million aggregate coverage. While some states require only $300,000, higher limits protect your personal assets better. The cost difference between $300,000 and $1 million coverage is often just $200 to $400 annually, making higher limits a smart investment.
Is workers' compensation required for daycare employees?
Workers' compensation is mandatory for any business with employees in all states except Texas and South Dakota. Requirements vary by state, with some requiring coverage for any employees and others having set minimum employee thresholds.
Even if not required in your state, workers' compensation protects both you and your employees. Without coverage, you could face personal liability for employee medical expenses and lost wages from work-related injuries.
Do I need insurance if I only watch a few children?
Yes, most states require insurance even for small home daycares. Some states require coverage if you care for just one unrelated child for payment. Check your state's licensing requirements, but insurance is essential to protect your personal assets, regardless of legal requirements.
Caring for even one child creates potential liability for serious injuries that could result in expensive medical bills and lawsuits. The relatively low cost of basic liability insurance makes it a wise investment regardless of your daycare's size.
How quickly can I get daycare insurance?
Many insurers offer same-day coverage for daycare businesses, allowing you to get quotes and purchase policies online. The application process often takes just minutes when you have your business information ready. You'll need details about your facility, number of children, employee count, and services offered.
Some specialized coverage types may require additional underwriting time, but basic liability coverage can often be obtained quickly.
Choosing a daycare insurance provider
Compare quotes from multiple providers to find the best coverage and pricing for your situation. Look for insurers that understand childcare risks and offer coverages specifically designed for daycare operations. Before purchasing coverage, ask these important questions:
What specific scenarios does your general liability coverage exclude?
Do you know the minimum requirements for daycare insurance in this state?
Do you offer abuse and molestation coverage, and is it included in the base policy or available as an endorsement?
How do you handle claims involving allegations against employees, and what support do you provide during investigations?
What discounts are available for safety training, background checks, or claims-free history?
Can I adjust my coverage limits and deductibles while maintaining adequate protection?
Do you provide risk management resources or training materials to help prevent claims?
What happens to my coverage if I expand my services, hire additional employees, or change locations?
How quickly can you provide certificates of insurance for licensing or parent requirements?
Using our proprietary cost database, in-depth research, and collaboration with industry experts, we deliver accurate, up-to-date pricing and insights you can trust, every time.