Liability insurance

Unexpected events can happen to the children in your care, their families, or anyone on your property. A child could be injured on a play structure, or someone visiting your program could trip and fall. 

In cases where children or others are hurt, they may need compensation for medical care. These events can lead to lawsuits that can cost hundreds of thousands of dollars. These legal actions could cause significant financial damage to your child care business. If you are a home-based provider, your homeowner’s or renter’s insurance won't cover these types of lawsuits.

There are usually two types of liability insurance: general and professional. General liability insurance covers physical risks. For example, someone being hit by a book falling from a shelf, or a child getting cut on a piece of playground equipment. Professional liability insurance covers circumstances when you don’t do something right like overheating a bottle of milk for an infant.  

When you choose liability coverage, think about the different costs you might need insurance for. Look for policies that cover key costs such as: 

• Attorney’s fees for defending against lawsuits, as well as legal expenses incurred from representation for administrative hearings with government agencies, such as licensing
• Medical expenses for the injured party
• Judgments regarding allegations of abuse and neglect
• Issues with food preparation or the distribution of medication
• Accidents occurring due to swimming pools, play structures, or toys
• Injuries from any animals the children may come into contact with
• The actions of all employees and volunteers 

You can also purchase secondary insurance, which covers the amount you have to pay before your insurance starts paying (this is called a deductible). The extra insurance limits your financial risk. Deductibles are often overlooked and can be very high. 

When you choose your insurance coverage, know the occurrence and aggregate limits. The occurrence limit is the amount the insurance will pay for each event. The aggregate limit is the total amount the insurance will pay over multiple incidents. For example, if a child is cut by something sharp, the occurrence limit tells you the maximum amount the insurance will pay. If a child was hurt last week and two others were hurt this week, you need to think about the coverage for each occurrence and for the total amount of the three occurrences. 

Contact your current insurance agent because you might get a discount for having more than one policy with them. It might be helpful to find an agent who works with child care providers because they will understand the unique needs of your business and the types of incidents that can occur. When you pick your policy, make sure the agent clearly explains what is and what isn’t covered. Think about possible situations and talk about whether the policy would cover them. 

Disclaimer 

The information contained here is for educational purposes only and is not intended to constitute legal, tax, or financial advice.