The question of daycare center insurance is a tricky one for every owner. What kind of coverage to get? What are the state regulations, and should you go above the minimum requirements even if you are a small daycare?
In order to help you get through the paperwork and focus on running your daycare, Hopping In has invited Todd Eggert to help us answer frequent questions. Todd is an expert in childcare insurance with over 11 years of specialized experience in childcare insurance, and he assists more than 200 centers in Illinois and the Midwest.
It’s better to be safe than sorry when you run a daycare, but that doesn’t mean you can’t find a reasonable insurance option. Let’s demystify the terms and help you make the right decision for your daycare.
Demystifying daycare center insurance terms
When it comes to daycare center insurance coverage, there are a few terms you should know:
Liability defines the situations that good insurance can help you resolve.
The bare minimum most states require is general liability, which covers claims for bodily injury or damage to property. However, this doesn’t include coverage for situations like negligence lawsuits, professional liability, workers compensation or more.
When selecting the policies, keep an eye out for aggregate sums. These define limits in how much the insurance can pay for all covered losses.
Annual premiums (how much you pay for daycare center insurance every year) for the most inclusive coverage vary from $2,000 to $8,000. Depending on the policy, this may mean that your daycare center insurance protects you from even the most obscure situations and gives you full coverage.
What kind of insurance coverage should I get?
The rule of thumb in daycare center insurance is: the more your policy covers, the better you are protected.
According to Todd, there’s no perfect answer, but he recommends at least $1 Million in general liability per occurrence, and $2M – $4M on the annual aggregate.
In his experience, professional liability coverage is a really important coverage to have when you’re a school type of business. There’s a great potential to get sued for “not teaching”, even though it may not be your fault.
There have been situations where a client would “guarantee” to parents that their child would be reading before kindergarten, and Todd’s client got sued when the child couldn’t.
This is where professional liability insurance coverage helps, as the insurance covers legal aid and eventual payoff.
When selecting a daycare center insurance policy, keep an eye out for how many different liabilities it covers.
In Todd’s case, his company offers a policy which includes general liability, professional liability, abuse and molestation coverage (at policy limits), business lost income insurance and many more.
How often do claims and lawsuits really occur?
Optimism matters in daycare, but it’s still good to have fail-safes in case the worst happens.
When asked about how often lawsuits happen to unsuspecting daycare owners, Todd says that there’s not a crystal ball that can determine it. He’s seen new centers get sued within the first three months of opening, and other centers have been in business for 30 years without a single claim.
Neighborhoods and exclusive facilities don’t matter either; there’s no way to tell, but a good policy can ease your mind.
It may seem like a lot of money, especially in daycare where the budget can sometimes be thin, so it’s good to look into options of generating extra revenue. For example, Hopping In lets parents in your daycare book extra care when they need. It’s also risk-free, since you only pay a fee when Hopping In helps you sell your daycare’s unused spots.
What should I look for in policies?
First things first: find a professional childcare insurance agent. It’s not a common field and there are only a few agents who specialize in it. Other agents who aren’t in the daycare center insurance can find a sub-standard carrier and sell it to you.
Todd sees a lot of these. A week ago, a daycare center had medical accident coverage of $5,000 per accident but there was a small problem – it didn’t include children. This commonly happens when insurance is contracted with agents and companies who aren’t specialized in childcare.
When discussing daycare center insurance policies, find the right agent to guide you through it. Insurance is necessary if you want to run your daycare without stress, but don’t settle for a policy that doesn’t work for you.
Our expert on daycare center insurance, Todd Eggert, loves assisting daycares so if you’ve got a question, you can reach him at 708-420-1057 or email@example.com.
Author: Hopping In Blog
Sholom Strick is an expert on the business of running daycare centers and founder of Hopping In, a tool that helps daycare centers earn more when children are absent.
To contact him or for media inquiries email firstname.lastname@example.org