Will homeowners insurance cover a home childcare business?
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If you run a childcare facility, insurance is vital. This is especially true if you run a daycare in your own home. Children are vulnerable and accidents do happen. Carrying insurance that will protect you and those in your care is important.
In order to operate a home daycare business, you will need a daycare insurance policy. Don’t expect your homeowners policy to provide all the coverage you need. This can leave huge gaps in your liability coverage and put you at risk.
So what are the best options for home daycare insurance? Read on to learn how to insure your in-home daycare comprehensively.
Most often, home daycare coverage can be added to your homeowners insurance policy as an endorsement. This add-on extends your liability to cover those in your care. This coverage will typically extend property coverage to the property from which your home daycare operates.
Eligibility for a home daycare insurance endorsement is often determined by the size of your childcare business. Most insurers limit the number of children that can be in your care. The maximum number may vary from one insurance company to another but usually falls somewhere between three and six children. If your home daycare's enrollment exceeds this maximum, you should look into a commercial insurance policy.
Each insurance company's home daycare coverage option is likely to vary slightly. Coverage may also differ depending on state regulations. One commonality across all home daycare policies is an increase in liability levels. The coverage endorsement extends your homeowners personal liability to provide protection in the event of an accident and a subsequent lawsuit.
Medical payments to others coverage is usually included as a part of daycare insurance. This covers injuries suffered by non-residents of the property who are hurt at your home. It typically pays medical bills, surgical costs, dental procedures, ambulance fees, and other associated costs.
In most cases, home childcare coverage also extends to personal property related to the business, such as playground equipment. When you add the home daycare endorsement, the $2,500 coverage on most business-related equipment is replaced with normal personal property limits (coverage C).
Whether or not you need home daycare coverage depends on the nature of your business.
If you babysit a nephew or a grandchild, it’s unlikely this endorsement is necessary. Similarly, your childcare is not considered a business if money doesn't change hands, in which case the liability portion of your homeowners insurance should — in most cases — suffice. If money is exchanged, you will need to acquire a daycare insurance endorsement.
The coverage you choose also depends on the scale of your home daycare. If you already have a number of children in your care or have plans to expand your business, consider a commercial policy separate from your homeowners insurance.
Furthermore, a standard home daycare endorsement only applies if you're the sole proprietor. If your business expands and you hire additional employees, you should acquire a commercial insurance plan.
Home daycare endorsements can be quite restrictive. State requirements or insurance company guidelines usually dictate strict limits on the number of children (not including your own) that can be under your care. In-home care of adults is typically disallowed from this policy endorsement. Furthermore, you can be denied home childcare center insurance if certain attractive nuisances exist on your property, such as a trampoline or swimming pool. Some playground equipment may be classified within this category, making you ineligible for coverage.
There are many things to consider when searching for the right coverage for your home daycare service. For instance, if you plan to use your vehicle for business purposes, it’s vital to find the right car insurance option. Otherwise, you could find your insurance company won’t cover you in the event of an accident.
Most homeowners daycare endorsements provide relatively limited coverage. Things like “corporal punishment liability” or “abuse and molestation liability” are usually excluded. You may also face an “aggregate limit of liability,” an annual combined cap on your personal liability and medical payments coverage. Once this limit has been reached, no further coverage will be provided for the duration of the year.
For these reasons, it could be worth looking into a commercial policy, especially if you are considering growing your business and want to make sure you and those in your care are properly protected.