When you care for children for a fee in your home or
commercial daycare center, you are in business, even if you do not need a
business license. Childcare providers face exposures to liability. To protect
you and your family's assets, you need to:
- Maintain a good safety program
- Follow applicable licensing requirements
- Purchase insurance
Reasonable Care
You have a legal duty to act with reasonable care while supervising children in
your custody. When a provider fails to use reasonable care and a child is
consequently injured or becomes sick, it can be said that the provider "breached
the duty of care" or "acted negligently," and that provider can be sued.
Frequently Asked Questions
Am I required to carry liability insurance?
State laws vary. Some have mandatory insurance requirements. Check with the
agency which licenses or registers your facility.
Does an affidavit or waiver protect me?
No! it only means the parent/guardian knows you do not have insurance and that
they must collect any money awarded from a lawsuit from you. You will have to
pay your own legal fees.
What are the different kinds of liability insurance?
Homeowners or renters insurance policies do not protect you unless you childcare
business is added to the policy for an extra charge. If it is added, coverage is
very limited. It does not provide the much needed child abuse coverage. Some
companies limit coverage to the childcare premises only.
General liability insurance provides a broader coverage and extends to cover
field trips. It can also be extended to include other coverages, including child
abuse, at no additional cost.
Professional Liability/Errors and Omissions insurance is considered by many to
be the broadest coverage. It provides coverage for negligent supervision for
childcare. It is the same type of insurance carried by doctors, lawyers, real
estate and insurance agents.
What does Negligent Supervision mean?
Negligent supervision is when a child's injury or illness could have been
avoided with reasonable care.
Can I be sued if I am not negligent?
Yes. Lawsuits can be filed against you when the injured child's
parents/guardians "think" you are at fault. Even groundless claims have to be
defended by an attorney. With insurance, if the claim is covered, the insurance
company pays the defense cost. If there is not insurance, you pay.
How does liability insurance protect me?
If you are sued because a child is injured, or becomes sick and the claim is
covered by the policy, the insurance company will pay your legal defense costs.
If you are found liable (negligent), it will pay the amount specified by the
judgement up to the policy limit.
Lawsuits are unpleasant as well as expensive, and you need a lawyer to defend
you. The best protection is the proper type of insurance, the kind of insurance
that is specifically designed for family childcare. Unfortunately, not all
childcare insurance policies are the same. It is important to look for a policy
that provides the best coverage.
Is there more than one type of insuring form?
There are two types of insuring forms. An "Occurrence Form" is best because it
covers claims reported after the policy expires, after you have gone out of
business or changed insurance companies.
Beware of "Claims-Made" forms. Claims can be made against a provider a number of
years after the injury, after the child has left the provider's care, or after a
provider goes out of business. In some states a minor can file a lawsuit up to
age 21. A "Claims-Made" policy only covers claims reported during a specified
time, usually during the policy term or within one or two years after the policy
expires.
If you have insurance and a child is hurt while in your care, it is important to
report it to your insurance company as soon as possible, even if you don't think
it is going to be a claim.
How much liability insurance should I buy?
That depends on your individual needs. If insurance is required in your state,
they will set a minimum limit. Check with the agency which licenses or registers
your facility.
What is a deductible?
It is the amount you must pay in addition to the policy premium for all claims.
Many companies have deductibles to reduce their expenses for handling claims,
which are charged even if nothing is paid on the claim. Deductibles should be
avoided because they increase the cost of your insurance.
What should be insured?
Professional Liability/Negligent Supervision and General Liability for your day
care operations on and off the premises, including claims or allegations made
against you because of your actions, or those of your employees, helpers,
spouse, children or residents of the household.
What should I look for in a policy?
Don't be fooled because a company says they have a "childcare" policy. There are
different kinds. It is important to look for one that has the best coverage. The
following are some of the most important coverages that best protect a family
child care business.
Defense Coverage. If you are sued, the insurance company will pay for your
defense even if the suit (claim) is groundless or fraudulent. For maximum
defense coverage, look for policy whose defense coverage is in addition to the
policy limit. This will reduce the amount of your liability coverage.
Child Abuse. This covers liability for claims made against you, residents of
your household, or your employees/helpers, whether groundless or not. Beware of
policies that include defense cost in the limit. It reduces the amount of your
insurance. Look for a policy that includes legal representation or defense costs
for Administrative Hearings resulting from allegations of Child Abuse.
Incidental Malpractice. This covers your liability in giving medication or
following a child's dietary needs.
Personal Injury. This coverage protects you against libel, slander, false
arrest, wrongful eviction and malicious prosecution.
Alienation of Affection. This protects you against claims that you are "stealing
the affection and control" of a child from their parent or legal guardian.
Contractual Liability. This covers your obligations under written agreements.
For example, it could cover your obligations to seek medical care in
emergencies, take a child on field trips, or to take and pick-up after school.
Field Trips/Off Premised Activities. This provides coverage when you are away
from your premises: trips to the park, museum, theater or market.
Products Liability. This includes preparing and serving of food.
Non-owned Auto Liability. This provides protection from lawsuits resulting from
children getting injured in an automobile accident caused by someone using their
car on your behalf. This coverage is not part of the liability coverage and may
be offered as an option.
Transportation Coverage. This protects you from lawsuits resulting from children
injured in an automobile operated by you or one of your employees. This coverage
is not part of the liability coverage and may be offered at an additional cost.
Accidental Medical Insurance. This pays medical bills resulting from an
accident, even if it is not your fault. Be sure the coverage is without a
deductible so you do not have to pay part of the bills.
Look for a policy that pays at least $20,000 for each child injured as a result
of an accident, including while being transported in an automobile. This
coverage can be added at a very low cost. Some companies may include your own
children enrolled in your childcare. Some will offer coverage for you or your
employees.
What are exclusions?
Exclusions are those events that are NOT covered by the policy. All insurance
policies have conditions and exclusions. It is important to read your policy.
Beware of policies that exclude coverage for all dogs on the premises, swimming
pools or other bodies of water, overnight care, HIV/AIDS or communicable
diseases, or non-emergency care before or after your regular operating hours.
Is Childcare Insurance a Business Expense?
Yes. It is tax deductible. Consult your tax preparer for specific details.
Can my homeowner or renter insurance be cancelled because I do day care?
You may have protection under state law. For example, in California, if you
already have a homeowner's or renter's policy, California Insurance code 676.1
prevents a company from canceling or refusing to renew an existing policy just
because you operate a family childcare business. Check with your state
Department of Insurance.
Can my landlord prevent me from doing childcare?
Once again, laws vary from state to state. However, sometimes a nervous landlord
is willing to rent to childcare providers if they are aware that you are a
licensed/registered provider and willing to add your landlord to your liability
policy.
What is Worker's Compensation insurance?
It pays medical expenses if any employee is hurt on the job. If they are unable
to work, it would pay disability benefits and rehabilitation expenses and a
death benefit. Most state law requires employers to have this type of insurance.
An employee is defined by state Labor Code.
Do I Need Auto Insurance?
If you own an automobile, auto liability insurance is required in virtually
every state. Childcare Liability policies do not include automobile insurance
and do not cover children in your childcare who are injured in an automobile.
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