Does My Homeowner’s Policy Cover My Home Daycare?

Starting a home daycare is a great business idea. No matter what the future holds people will always need support for children. With homeschooling and working from home, many parents have a newfound appreciation for teachers and childcare workers. Starting any new business can be a stressful time especially when it comes to insurance. When it comes to in-home daycare will your regular insurance cover you or do you need a specific home daycare insurance?

General Homeowners Insurance

When it comes to insurance policies reading the fine print should be done numerous times and with a cup of coffee. The specific language is crucial to determining whether or not your current homeowner’s insurance will cover a home daycare service. Some insurance companies will provide the coverage. However, most homeowners insurance will not cover daycare insurance in their policies. Childcare could be covered if it isn’t a monetary business. If you babysat your nieces and nephews and were paid, sadly it wouldn’t be covered. 

Homeowners insurance usually only covers up to $2,500 for in-home business property protection. The coverage does not include liability protection to in-home businesses. Basically, this means if a child is hurt while at your daycare, you would have to pay their medical and legal fees, which will be costly and cause irreparable damage to your business.

If the coffee isn’t kicking in and the fine print is confusing, you can always call your insurance company and ask if they’ll cover it. When it comes to insurance, it’s best to have clear answers. Children are an added risk though. Some insurance companies won’t want to take the risk and might even deny the renewal of your current insurance plan.

Endorsements/Add-On

If your homeowner’s insurance does not provide coverage for home daycare, some insurance companies offer endorsements or add-ons. These endorsements and add-ons will cover home daycare. They typically cover business property, lost income if your home is damaged or destroyed, and basic liability protection for injury and accidents. If you have to move to a temporary location in the case of property damage, additional expenses will be covered too.

Most of these endorsements have very specific coverage and are restrictive. For example, it will only cover kids while they are on your property and there is a limit to property damage. In the majority of cases, an endorsement caps the number of children your daycare can have. The maximum number varies between insurance companies, but most max out at six to three kids. If you are hit with an expensive lawsuit, the endorsement will not completely cover you. 

You can also be denied an endorsement if you have certain insurance hazards on your property. While having a pool and a trampoline would be considered an amazing daycare for any child, some companies don’t want to take an unnecessary risk and will deny you. They might even consider a playground too much of a hazard depending on what equipment is on the playground. A sandbox is probably allowed, but the jury’s out on the swing set. An endorsement only works if there is only a single person owning and running the daycare. Any hiring of employees will require business insurance. 

It’s also important to note that in a large portion of states, they require you to have home daycare insurance in order to meet the home daycare licensing requisites. If your state does not need you to adhere to this requirement, homeowners insurance with an enhancement does make it possible to run a small home daycare. However, it is not the best fit for your business. It would be equivalent to putting a triangle peg into a circular hole. It might fit, but it’s not what it’s meant for. 

When it comes to coverage for a home daycare, it’s best to get home daycare insurance. This will cover all your bases, giving you coverage for the situations most likely to occur when taking care of small children. This includes liability protection, property insurance, and additional coverage for field trips, lost income, and worker’s compensation. The liability protection will include general, premises, professional, commercial vehicles, non-owned auto, abuse and molestation, and corporal punishment. The property insurance will cover the building, contents, and outdoor equipment like swing-sets. Kids play hard and their toys unfortunately aren’t indestructible. The contents insurance will be necessary. The bottom line is home daycare insurance is a type of business coverage whereas homeowners insurance covers events specifically related to homeownership.

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