Home Childcare Providers Need a Commercial Policy

In the U.S., there are more than 280,000 regulated “home daycares” (also known as “family daycares”) that are run out of residences. It seems that in-home daycare is a popular choice for parents . . . and a booming business. Whether you operate a daycare center or simply provide childcare for family or friends, if you receive compensation for it, the operation becomes commercial, with the attendant risks and legal concerns. All childcare providers are potential lawsuit targets, so at minimum, you’ll need liability protection. Here are some facts you should be aware of:

Homeowners insurance: As of 1991, homeowners insurance excludes liability protection related to home-based commercial activities. Furthermore, the majority of homeowners insurance policies specifically exclude liability coverage for claims arising from home childcare businesses. Homeowners insurance endorsements may provide limited protection, but few insurers offer it. When it is available, it’s often restricted, limiting you to the care of three or four.

Coverage: Business liability insurance is the best choice. There are a range of commercial childcare policies, many offering protection for professional liability claims, which homeowners insurance endorsements don’t cover. These policies differ greatly in coverage and exclusions. Usually, there are exclusions for claims dealing with the administration of medicine, field trips, transportation, pets, or “attractive nuisances,” such as pools or trampolines.

As for liability limits, you should have at least $1 million of coverage on a per-claim occurrence.