Don't forget to share this post!

Running a daycare means taking on one of the most important responsibilities there is—caring for children. But even in the safest facility, unexpected things happen. A child falls on the playground, a parent slips in the entryway, a teacher gets injured lifting a toddler, or a water leak damages the building.

That’s why daycare insurance matters. It protects childcare providers from financial risk, legal claims, and accidents that could otherwise threaten the business.

Whether operating a home daycare or a commercial childcare center, the right insurance policy helps safeguard the operation, staff, and the families who trust the daycare every day.

Types of Daycare Insurance Coverage You Should Know

Below are the most common policies daycare providers need—and why they matter.

1. General Liability Insurance (Includes Abuse & Molestation Coverage)

General liability is the foundation of daycare insurance. It protects the business if someone is injured or property is damaged due to daycare operations.

Examples of covered situations:

  • A child is injured while playing

  • A parent slips and falls on the property

  • A visitor claims their belongings were damaged

General liability also typically includes legal defense costs, settlements, and court fees.

Abuse & Molestation Coverage

This is one of the most important parts of a daycare policy—and one of the most misunderstood.

Abuse & Molestation coverage is typically written as an endorsement under the General Liability policy, not professional liability.

It helps protect the daycare if someone alleges:

  • Abuse

  • Molestation

  • Improper conduct

  • Failure to report

  • Negligent supervision related to abuse allegations

Even if an allegation is false, the legal defense costs alone can be devastating. This coverage should always be confirmed and reviewed carefully.

2. Professional Liability Insurance (Errors & Omissions / Negligent Supervision)

Professional liability protects daycare providers against claims that the daycare failed in its professional duty of care—even if no physical injury occurs.

This is sometimes referred to as:

  • Errors & Omissions (E&O)

  • Negligent supervision coverage

It can apply to allegations such as:

  • Failure to supervise properly

  • Mistakes in childcare procedures

  • Emotional injury claims

  • Allegations that staff acted negligently (not intentional abuse)

  • Failure to meet professional standards

This coverage is important because many daycare claims involve allegations of negligence—not just accidents.

3. Commercial Property Insurance

Property insurance protects the building (if owned) or the daycare’s contents (if rented).

Items commonly covered:

  • Furniture

  • Toys and learning equipment

  • Electronics

  • Playground equipment

  • Supplies and materials

Property coverage helps for losses caused by:

  • Fire

  • Smoke

  • Theft

  • Wind and storm damage

  • Certain types of water damage (depending on cause)

Important note for home daycares:

A homeowners policy often excludes business activity. Home daycare operators usually need a business endorsement or separate daycare policy to avoid coverage gaps.

4. Workers’ Compensation Insurance

If there are employees, workers’ compensation is often required by law.

It covers:

  • Medical treatment for work-related injuries

  • Lost wages

  • Disability benefits

Common daycare injuries include:

  • Back injuries from lifting children

  • Slips and falls

  • Repetitive strain injuries

Even small daycare operations may be required to carry this coverage depending on the state.

5. Commercial Auto Insurance (If Children Are Transported)

If transportation is offered, personal auto insurance usually does not cover business use or passenger liability.

Commercial auto insurance can help cover:

  • Accidents while transporting children

  • Liability claims

  • Vehicle damage

  • Medical expenses

  • Passenger injury claims

If transporting children is part of daycare services, commercial auto coverage is typically required.

6. Umbrella Liability Insurance

Umbrella insurance provides extra protection above general liability and auto limits.

It is often recommended because:

  • Injury claims involving children can become large quickly

  • Lawsuits may exceed basic liability limits

  • Umbrella coverage adds protection without a major increase in premium

Cost of Daycare Insurance

Insurance costs vary widely based on the daycare type, number of children, staffing, and risk exposure.

Typical pricing ranges:

  • Home daycare: often around $700 per year

  • Childcare centers: often start around $2,200 per year and increase depending on size and risk

Factors that affect cost:

  • Number of children enrolled

  • Age groups served

  • Staff size

  • Location and licensing requirements

  • Claim history

  • Transportation exposure

  • Playground equipment and facility hazards

  • Safety training and procedures

The more children and staff involved, the higher the exposure and the higher the insurance cost.

Risks of Not Having Daycare Insurance

Operating without daycare insurance creates major risk.

1. Personal Liability

Without coverage, daycare owners may personally pay for:

  • Medical bills

  • Legal defense

  • Settlements

  • Property damage claims

Depending on how the business is structured, personal assets may be at risk.

2. Licensing and Regulatory Problems

Many states require insurance to maintain daycare licensing. Lack of coverage can lead to:

  • Violations

  • Fines

  • Licensing delays

  • Forced closure

3. Loss of Parent Trust

Parents expect transparency and professionalism. If they learn a daycare is uninsured, it can lead to:

  • Families pulling their children out

  • Negative reviews

  • Reputation damage

Tips for Choosing the Right Daycare Insurance Policy

1. Assess the Real Risk

Consider:

  • Number of children

  • Activities offered

  • Age groups served

  • Building value

  • Equipment value

  • Employees

  • Transportation services

A home daycare with six kids has a very different risk profile than a 40-child facility with staff and vehicles.

2. Work with Carriers that Specialize in Daycare

Not every insurance company understands childcare. A strong daycare policy typically includes:

  • General liability

  • Abuse & molestation

  • Professional liability (negligent supervision)

  • Medical payments coverage

  • Proper limits for child injury exposure

3. Bundle Coverage

Many policies can bundle:

  • Liability

  • Property

  • Professional liability

  • Business interruption

Bundling reduces cost and prevents coverage gaps.

4. Review Annually

If the daycare adds:

  • More children

  • More staff

  • Transportation

  • New facilities

  • Extended hours

  • Additional services

…the policy should be updated.

Final Thoughts: Daycare Insurance Is Tough to Find — and the Carrier Matters

Daycare insurance isn’t just a requirement. It’s a safeguard for the business, the staff, and the families served. The right coverage protects:

  • Income

  • Reputation

  • Long-term stability

  • The children in care

And one important reality: daycare insurance is very tough to find. Many carriers do not want to insure childcare because of the severity of claims and how sensitive abuse allegations can be.

In most cases, the main carrier that consistently writes daycare insurance is Markel, and they are widely considered one of the best options in the market. Markel’s daycare coverage is typically the strongest by a long shot, and when daycare insurance is needed, they are often the best place to start.

Next Step

We are here to serve truckers through commercial trucking insurance, risk management, and industry support. Want to learn more or work with us? Request a quote or call.

Related Articles