Different types of insurance are required for different types of child care businesses. Requirements vary by state. It is important to consider all insurance options, even if they are not required by your state. Your business is a big investment, both personally and financially. You should protect that investment and yourself by understanding the insurance available to you and deciding what to purchase. Legal advice may be helpful to you in making your decision.
Types of Insurance
Business Owners Insurance, which includes general liability and property insurance, is a more economical way of buying General Liability and Property Insurance than buying it separately.
- General Liability Insurance covers bodily injury or property damage that occurs during the course of or because of your business. If a child trips on the stairs and is injured, for example, the parents may sue you.
- Property Insurance covers all of your business equipment inside and outside of your program.
Professional Liability Insurance is separate and insures you and others you employ for loss arising out of your responsibility or negligence while performing your business. It is important to closely review the differences in cost between liability limits; there is usually minimal cost difference for higher liability coverage. While sexual abuse and molestation coverage is usually included in your Professional Liability policy, you should verify this with your insurer.
- Sexual abuse or physical abuse coverage insures you for loss if one of your employees or others with access to children in your program abuses a child in your care.
Workers’ Compensation Insurance is required in many states for all employees and, in some states, for the business owner and employees as well, depending upon the type of business. This insurance pays benefits when an employee is injured while working. This insurance is governed by the state in which you reside.
Are Family Child Care Businesses Adequately Prepared for the Impact of a Disaster?: This article from Child Care Aware® of America shares lessons from Family Child Care providers who experienced damage to their homes and property after disasters struck their home business. Be sure to review the included PDF on How Insurance Protects You in an Emergency.
How to Purchase Insurance
Insurance requirements for child care providers vary by state. Contact your local Child Care Resource & Referral agency (CCR&R) or your state child care licensing office for information on type of insurance you may be required to carry.
When choosing an insurance policy, consult an insurance agent who understands the child care business. If you need more information on how to purchase insurance for your business and/or you do not have an insurance agent, contact your State Insurance Commissioners office (see National Association of Insurance Commissioners).