What Does Daycare Insurance Cover? Cost, Types and Liability

Finding the right daycare for your child is a top priority for working parents and guardians. You want to ensure your child is in a safe and nurturing environment while you are away. However, accidents can happen anytime, and even the most careful daycare providers may face lawsuits from disgruntled parents. That’s where daycare insurance comes in.

Daycare insurance is a type of business insurance that provides coverage for childcare facilities against potential risks and liabilities. In this blog, we will explore what daycare insurance covers, its cost, the different types available, and the importance of having daycare insurance for your childcare facility.


The coverage provided by daycare insurance varies depending on the insurance company and the type of policy. However, most daycare insurance policies cover similar risks and liabilities. Some standard coverage includes:

  • • General Liability: This coverage protects daycare providers against property damage or claims of bodily injury caused by accidents at the facility.
  • • Professional Liability: Can also be known as errors and omissions insurance; professional liability covers legal fees and damages in case of claims of negligence or failure to provide adequate care.
  • • Abuse and Molestation: Unfortunately, daycare facilities are not immune to cases of abuse and molestation. This coverage protects the facility against claims from victims and their families.
  • • Property Damage: This covers damages to the facility’s property caused by natural disasters, vandalism, or theft.
  • • Business Interruption: In case of a temporary closure due to unforeseen circumstances, business interruption coverage can provide financial support until the facility resumes operations.


The cost of daycare insurance varies based on factors such as the size and location of your facility, the number of children in care, and coverage limits. On average, annual premiums for daycare insurance can range from $500 to $2,000. However, the cost can be higher for more extensive facilities or those with a claims history.

While daycare insurance may seem like an additional expense, it is essential to consider the potential costs of lawsuits without proper coverage. A single lawsuit can easily surpass the annual premium and put your facility at risk of closure.

Tips for Reducing Daycare Insurance Costs

Reducing the costs associated with daycare insurance can make it a more affordable necessity. Here are a few tips to help lower your premiums:

  • Maintain a Safe Environment: An environment with minimized risks will have fewer accidents and claims, thus lowering your insurance costs. Conduct regular safety checks and make necessary improvements to ensure the premises are child-friendly and safe.
  • Proper Staff Training: Regularly training your staff to handle emergencies and understand childcare standards can reduce the likelihood of negligence claims.
  • Implement a Strong Child Protection Policy: Having explicit policies and procedures in place for staff regarding child protection can help deter potential abuse and molestation claims.
  • Install Security Measures: Enhanced security measures such as CCTV cameras and secured entrances/exits protect the children and help reduce the risk of theft and vandalism, thus potentially lowering your insurance premiums.
  • Shop Around: Don’t settle on the first insurance quote you get. Explore different insurance providers and their offerings to ensure you get the best rates for the coverage you need.

Remember, while cost-saving is essential, it should not compromise the quality of coverage. Ensure your policy protects your daycare business and the children you serve.


There are different types of daycare insurance policies available in the market. The most common types include:

  • •In-home Daycare Insurance: This is for individuals who run childcare facilities from their homes and need personal liability coverage.
  • •Small Business Daycare Insurance: This type of policy suits small daycare businesses with fewer than 20 employees.
  • Large Business Daycare Insurance: This type of policy provides extensive coverage for larger daycare facilities with more than 20 employees.
  • Group Daycare Insurance: This is for daycare providers who offer services to a group of children, such as at a community center or church.

Debunking Common Misconceptions about Daycare Insurance

While the importance of daycare insurance is increasingly recognized, several things still need to be addressed. Here, we aim to debunk some of the most common myths.

  • “Daycare Insurance is Optional”: Some daycare providers operate under the belief that insurance is an optional safety net. However, many states require daycare facilities to carry insurance as a part of their licensing process. Even in states where it’s not required, insurance is critical to protect your business from potentially crippling lawsuits.
  • “Homeowner’s Insurance is Sufficient for In-Home Daycares”: If you’re running a daycare from your home, you might think your homeowner’s insurance will cover any daycare-related incidents. Unfortunately, this is often not the case. Many homeowner’s policies exclude business-related liabilities, making securing a separate daycare insurance policy essential.
  • “Daycare Insurance Covers Only Accidents”: Some believe daycare insurance only covers accidents that cause physical injury. While accident coverage is a critical aspect, daycare insurance also covers issues like property damage, professional liability, business interruption, and even claims related to abuse and molestation.
  • “It’s Too Expensive”: Yes, daycare insurance is an additional cost. However, it’s essential to consider the potential financial impact of a single lawsuit without insurance. The cost of daycare insurance is minimal compared to the potential costs of legal fees and compensation payouts.

Remember, education and understanding are essential when it comes to insurance. You should always consult your insurance provider to ensure you are adequately covered.


Having daycare insurance is crucial for any childcare facility. It protects against potential risks and liabilities and gives parents peace of mind knowing that their child is in a safe and insured environment. As a daycare provider, having proper insurance coverage can also help attract more parents, as they will feel more confident in using your daycare for their children, knowing you can handle any unforeseen situations. Moreover, many states require daycare facilities to have liability insurance as part of their licensing requirements. A facility may face fines or even lose their license without proper coverage.


In conclusion, daycare insurance is an essential investment for any childcare facility. It provides coverage against potential risks and liabilities, ensures the facility’s financial stability, and gives parents peace of mind. If you are a daycare provider, research and compare different policies to find the right one for your business. Remember, it’s better to be safe and fully covered when protecting your business and the children in your care.