Q:
What kind of insurance do I need for a daycare business in my home?
Answer:
Running a daycare business in your home exposes you to numerous financial risks (e.g., costs incurred if someone is injured while in your care or property is damaged). Before you start the business, take steps to make sure that your insurance coverage is adequate.
Standard home insurance policies may not provide adequate coverage for property damage and liability claims that can arise from operating a home-based business. In fact, most policies will specifically exclude coverage for daycare operations (although this depends on the number of children you are caring for and the state in which you live). Contact your insurance company to see if it will allow you to attach an endorsement or rider to your existing homeowners' or renters' insurance policy that extends coverage to your daycare business. Alternatively, consider purchasing a separate policy to provide coverage for your business, such as a business owner's policy (BOP).
Some insurance companies offer a special type of insurance policy that is designed specifically for day care (a daycare policy). It is completely separate from your homeowners or renters policy, and it provides you with all the liability coverage you will need. You may need to purchase this type of policy as your daycare business grows (i.e., the number of children you care for increases). Ask your insurance agent for more information on daycare policies.
If you are planning to transport your daycare children in your car, make sure that your existing auto insurance policy provides coverage for the business use of your personal vehicle. If not, consider purchasing a business auto insurance policy.
Note: You may want to talk to your insurance agent about legal defense coverage, which will pay for legal fees that can result from being sued for the sexual, emotional, and/or physical abuse of a child in your care.