Daycare Business Insurance

Every daycare business needs insurance. Knowing which type of insurance you need and the best place to get it is the next step.

This article will cover the main types of business insurance and help you find the best daycare business insurance.

Recommended: Next Insurance is dedicated to matching small businesses with the right policy at the best price.

Best Insurance for a Daycare Business

The most common and comprehensive type of daycare business insurance is general liability insurance. We recommend general liability insurance as your first line of defense against a variety of the most general and commonly occurring claims.

Some of the risks general liability insurance covers are:

  • Bodily injury
  • Property damage
  • Medical payments
  • Legal defense and judgment
  • Personal and advertising injury

While a daycare business isn’t legally required to carry general liability insurance, operating without it is extremely risky. If your daycare business is sued, you could face fees totaling hundreds of thousands of dollars (or more).

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Using a fully online insurance provider saves time and money and offers the most accurate quotes.

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Cost of General Liability Insurance

The average daycare in America spends between $300-$800 per year for $1 million in general liability coverage.

Compare the average cost of general liability insurance for a daycare business to other professional industries using the graph below:

Graph showing average price of general liability insurance prices per industry

Several factors will determine the price of your policy. These include your:

  • Location
  • Deductible
  • Number of employees
  • Per-occurrence limit
  • General aggregate limit

You may be able to acquire general liability insurance at a discounted rate by purchasing it as part of a business owner’s policy (BOP) rather than as a standalone policy.

A BOP is a more comprehensive solution that includes multiple forms of coverage, such as business interruption and property insurance.

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Finding the most affordable premium starts with getting accurate quotes from highly rated providers.

Common Situations That General Liability Insurance May Cover for a Daycare Business

Example 1:  After a parent drops their child off at daycare, the child becomes upset and runs into some glass doors with a toy in their hand. The impact causes the glass to shatter and leaves the child cut badly enough to receive stitches. General liability coverage will likely cover any damages involved in a lawsuit.

Example 2:  A new family is touring your daycare after hours, and one of the parents slips and falls on the freshly cleaned floors. With general liability insurance, you can protect your business and pay for any damages if you are sued.

Example 3:  During outdoor recess, a toddler manages to climb to the top of the jungle gym unnoticed by a caregiver. While playing, they fall from the top of the structure and break an arm. Your general liability insurance will likely cover their associated medical bills and any other damages.

Check out our review of the Best Small Business Insurance Companies.

Other Types of Coverage Daycare Businesses Need

While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some other types of insurance all daycares should obtain:

Commercial Auto Insurance

Your personal car insurance will not cover any accidents or situations where a work vehicle causes property damage to another car on the road. Commercial auto insurance is necessary for any cars that are used for business purposes.

Workers’ Compensation Insurance

If one of your employees becomes injured or ill on the job, workers’ compensation insurance can help to cover their medical bills and lost wages. This type of insurance is required in most states for any business that employs part-time or full-time workers.

Home-Based Business Insurance

If you operate your daycare from your home, your homeowner's insurance policy may not cover accidents that are related to your business. This type of policy can be tailored to meet your specific needs and provides an extra layer of protection for your home in the event of an accident or lawsuit.

Commercial Umbrella Liability Insurance

Operating a business involving the care of small children comes with a variety of different risks, and the liability expenses associated with a lawsuit could very well exhaust your primary policy limits. With the help of commercial umbrella liability coverage, you can rest easy knowing you have an extra layer of protection in the event that the damages associated with a lawsuit exceed the limits of your primary policies.

Additional Steps To Protect Your Business

Although it’s easy (and essential) to invest in business insurance, it shouldn’t be your only defense.

Here are several things you can do to better protect your daycare business:

  • Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
  • Set up an LLC or corporation to protect your personal assets. (Visit our step-by-step guides to learn how to form an LLC or corporation in your state.)
  • Stay up to date with business licensing.
  • Maintain your corporate veil.

Business Insurance Is the Best Way to Protect Your Business

If you're starting a new business, then you need business insurance. It's as simple as that. The protection offered by an LLC will protect your personal assets, but your business's assets are still open to liability in the case of a lawsuit or other loss.

Be sure that everything you've built is safe by getting business insurance.

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Daycare Business Insurance FAQ

Can I buy business insurance online for my daycare business?

Yes, absolutely. You will need to first get a quote from an online business insurance provider like Next Insurance. Next allows you to then purchase a policy immediately and your coverage will be active within 48 hours.

What is included in a business owner’s policy?

A typical business owner’s policy includes general liability, business interruption, and commercial property insurance. However, BOPs are often customizable, so your agent may recommend adding professional liability, commercial auto, or other types of coverage to your package depending on your company’s needs.

What is the difference between business insurance and general liability insurance?

"Business insurance" is a generic term used to describe many different types of coverage a business may need. General liability insurance, on the other hand, is a specific type of coverage that business owners need to protect their assets.

Do I need insurance before I start a daycare business?

You should invest in business insurance coverage for your business before your first interaction with a customer. Although the cost of insurance may seem high for a brand new business, it’s best to be proactive when it comes to protecting your assets. After all, you can’t buy insurance to cover a loss that has already occurred.

Will insurance protect my daycare business from everything?

Not necessarily. Certain exceptions may be written directly into your daycare business insurance policy, and some perils may be entirely uninsurable.

Is general liability the same as business owners?

A general liability insurance policy covers only liability losses. A business owner's policy covers both liability and property losses.

How do I choose the best general liability insurance?

The best general liability coverage for your business really depends on the amount of coverage you’re comfortable with and how often you expect to file a claim. A relatively safe business with a very low risk of accident or legal liability could opt for lower premiums with higher deductibles. 

However, if you are in an accident or injury-prone industry or are making advertising claims about the effectiveness of your service or product, you may wish to consider more extensive coverage. We recommend using a digital insurance provider like Next Insurance.

Do I need business insurance if I already have an LLC?

Yes, an LLC is meant to create a legal barrier between your business and your personal assets and credit. If you haven’t formed an LLC yet, use our Form an LLC guide to get started.

An LLC doesn’t protect your business assets from lawsuits and liability– that’s where business insurance comes in. Business insurance helps protect your business from liability and risk.

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