What You Should Know About Home Daycare Insurance
Chicago, IL

What You Should Know About Home Daycare Insurance

Chicago, IL

What You Should Know About Home Daycare Insurance


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Jennifer Carlson
Written by
Jennifer Carlson
Edited by
Tamatha Hazen
Fact-checked by
Kristen Cramer

Home daycare insurance

For home daycare owners, ensuring the security and well-being of the children is a top priority. However, unexpected events and accidents can occur, making proper daycare liability insurance coverage crucial for home daycare providers.

In this article, we'll explain the significance of home daycare insurance and outline the various policies and costs you should consider. By familiarizing yourself with these insurance options, you can safeguard your business while offering reassurance to both you and the families under your care.

What is home daycare insurance?

Home daycare insurance, sometimes referred to as childcare or daycare liability insurance, is a specialized form of business coverage tailored for childcare providers. It safeguards against potential risks and liabilities. This insurance offers financial protection if accidents, injuries, property damage, or legal issues occur while children are in your care.

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Types of in-home daycare insurance

The exact insurance requirements for your daycare will depend on your state's licensing regulations, the number of children you care for, and the type of daycare you operate. It’s essential to research and choose insurance policies that align with your business needs while protecting you from potential liabilities.

Your homeowners insurance may cover damage to your property, but not all policies cover a home daycare because of the higher risk associated with them. In this case, you'll need a separate policy. Most in-home daycare insurance policies provide coverage in the following scenarios:

Daycare liability insurance

General liability insurance, or "slip and fall" insurance, safeguards your home daycare business against claims of property damage or injuries to children or families on your premises. It also covers potential legal fees and court costs your business might face. This insurance typically includes coverage for:

  • Damage to equipment and supplies (e.g., furniture, toys, appliances)

  • Property damage from natural disasters

  • Property damage due to vandalism

  • Reputational harm

  • Physical injuries children may sustain while under your care

Workers' compensation

Workers' compensation insurance protects both employees and employers of a home daycare from the financial strain of work-related injuries or illnesses. It covers medical costs and lost wages for employees if you have any. For employers, it reduces the risk of lawsuits.

Commercial auto

If you provide transportation services for children to and from your home, commercial auto liability insurance is essential. This coverage protects you from potential financial losses and legal actions resulting from accidents involving your business vehicles. Commercial auto liability insurance includes:

  • Coverage for your passengers' injury treatment costs

  • Medical and repair expenses if the other driver is at fault but lacks sufficient insurance

  • Collision damage to your vehicle

  • Comprehensive coverage for non-accident-related damage to your vehicle

Abuse & molestation

All daycares face the unfortunate reality of potential abuse or molestation allegations. To address this sensitive issue, many daycare insurance policies incorporate specific coverage for claims of abuse, molestation, or misconduct involving daycare staff.

This specialized coverage offers financial protection and can assist with legal defense expenses should such allegations arise, helping to safeguard your business and reputation.

Errors & omissions

Errors and omissions (E&O) insurance, or professional liability insurance, safeguards home daycare providers against claims of negligence or inadequate care. This coverage is vital when parents or guardians allege harm due to negligence or professional misconduct. E&O insurance covers:

  • Injuries to children resulting from insufficient supervision

  • Failure to deliver promised services, such as not meeting a certain educational standard

  • Professional oversights or errors, such as accidentally giving peanut butter to a child with a known peanut allergy

Home daycare insurance cost factors

Home daycare insurance costs $400 to $1,500 per year on average, depending on the size of the daycare and the specifics of your policy.

Home daycare insurance costs
Payment type Average premium cost
Per month $35 – $125
Per year $400 – $1,500

The actual cost of a home daycare insurance policy will vary depending on the following factors:

  • Location: Some state and local regulations include specific insurance requirements and minimum coverage levels. Certain states require particular insurance riders, such as coverage for abuse or molestation. To ensure compliance and sufficient protection, it’s important to understand the specific regulations and insurance mandates in your area.

  • Daycare size: Daycares with more children and staff will require more coverage than smaller operations. The size of a home daycare is often proportional to the insurance premium. If you have a pool on your property, you'll likely pay more.

  • Age range: The age range of the children in your home may affect the necessary coverage and therefore the cost of the insurance.

  • Deductible: Plans with a higher deductible mean you pay more out-of-pocket before the insurance kicks in, but your annual premium is lower. High-premium plans often have low deductibles.

  • Revenue: A good rule of thumb for home daycares is to set aside 1% to 5% of annual revenue for insurance. Higher-risk businesses may need to budget more.

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FAQs about insurance for home daycare

Do you need insurance for home daycare?

Yes, if you operate a daycare out of your home, you need insurance for it. Most states require in-home daycares to have liability insurance before they can qualify for licensure. Not only that, but many homeowners insurance policies don't cover daycares.

How much coverage do I need?

The amount of coverage you need will depend on your state's requirements, the age and number of children you care for, and whether you have any employees. Make sure you're protecting your current assets as well as any future assets and earnings you may have.

The coverage for home daycare insurance policies normally ranges from $300,000 to $1,000,000 per occurrence or up to $3,000,000 total.

Where can I buy home daycare insurance?

Home daycare insurance policies are specialized and often not covered by standard homeowners insurance providers. Therefore, it's necessary to explore other options for comprehensive in-home daycare insurance. Some reputable providers include:

  • American Family

  • Markel

  • Next Insurance

  • CoverWallet

  • Assure Child Care

  • JMG Insurance Agency


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