When most parents are looking for daycare, they usually come with a list of questions for the childcare providers to ensure their child is going to be well looked after. Questions ranging from how often there’s snack time and naptime, cost, what kind of activities are done, and backgrounds of any childcare providers at a daycare center are common. However, there’s one question that should always be on the list of questions parents have for anyone offering childcare. Although healthy snacks are important, the question of whether a daycare center is properly insured should carry strong weight when looking for childcare.
Childcare professionals know this — but they also know it’s not a question asked by a great deal of parents. Some buy coverage (and adequate coverage at that) when offering childcare, but there are those who color outside the lines of responsibility, taking advantage of the fact that some parents don’t consistently ask about insurance. If you’re a parent, and you ask a daycare business about insurance coverage, you’ll be able to tell within seconds what the truth is about their coverage. It usually doesn’t take seeing a copy of a policy or scrutinizing one to deem a daycare business’s insurance adequate or inadequate. There’s something to be said for “motherly instincts” (which fathers have too of course, but it’s just not as well-known as mothers’).
Understandably, parents are more apt to bring children to daycare centers if regulated and insured. After all, they’re parents, and if anybody knows how much risks children pose, it’s them. Those risks are plentiful.
The Insurance Band-Aid for Boo-boos & Ouchies
Safety and health are the largest issues daycare centers face. Between children’s high energy levels and “no fear” mentalities, boo-boos are bound to happen. Scraped knees on playgrounds are passages of childhood, but more serious injuries can end your business and your future in childcare. If a parent sues over their child’s broken leg because of negligence, or even reasons like being under-staffed, there will be a price to pay that will undoubtedly cost more than having your entire business’s walls and furniture padded insane asylum style.
That said, the most common — and incredibly important — aspect of commercial insurance policies is the same thing found on every other insurance policy types — liability coverage. This would protect you in the event of lawsuits, and can help cover the medical bills, lost wages, legal fees, and other incidental expenses if children or even parents, employees, or other visitors are injured on your business property.
Obviously, daycare businesses pose unique insurance challenges as there are extremely high liability risks present. If you’re running a daycare business, you take care of others all day long. But who’s taking care of you in the event that you’re sued for something relating to your business? It should be your insurer. Consider the following potential insurance claims and how commercial insurance options could help:
- You’re organizing a playground game with several children. You hear a scream from the other side of the playground. A swing rope has snapped — and so did a child’s arm. It’s discovered that your defective playground equipment caused the accident, and his parents want you to pay. Your liability coverage would kick in here unless it was proven that you knew of the defect but failed to repair it.
- You’re sued by a parent who believes your daycare was the cause of their child’s illness, which ultimately resulted in the child’s death. Parents know that occasionally viruses are passed around from one sniffling child to another. However, you’re still responsible for implementing policies to help limit the spread of diseases and illnesses. You may be thinking, “but it’s not my fault if a child gets a cold!” However, if a parent believes your facility failed to protect their child from it, you won’t only face losing business. If the daycare center is found to be the culprit and it’s found that you failed to follow legal health and sanitation guidelines, or if you’re found negligent for something that led to the illness, you could face a lawsuit. Months of defending your case in court, paying for medical bills, lost wages, and pain and suffering gets costly quickly. When your liability limits get as close to being as maxed out as MC Hammer’s credit cards, you’ll wish you’d invested in umbrella insurance coverage, which extends liability limits from other policies of yours, like homeowners. Lawsuits against businesses are bad enough, but when children are involved, lawsuits tend to grow in size.
- Some tornadoes came to town, you return to your daycare center to find busted windows and a collapsed entrance. Your commercial property policy can help put the pieces back together — keeping the new windows clean will be a different story.
- A lawyer contacts you, informing you that a family is claiming a member of your staff sexually abused their child. Again, you think you’re not responsible. However, the allegations blame a lack of adequate supervision and background checking on your part. Fortunately, insurers thought of this scenario, and whether the claims are true or false, there’s actually a specific coverage option just for this — Abuse & Molestation Coverage. It could help with court costs you incur, not the alleged abuser. However, all coverage is pending until the investigation is closed, so you will have to wait for retribution.
- Your best full-time employee breaks her ankle during the annual field day sack race and has to sit out of work for several days. Worker’s compensation will help her pay for her hospital visit and wages she missed. Additionally, in more serious situations, there’s an option called “key man” insurance which can help prevent your business from suffering financially if an important, key player you greatly depend on is unable to work for a long period of time due to serious injury or illness, passes away, or becomes permanently disabled and can never return. Although no amount can really be put on a good employee, such compensation can help you keep balance in such situations. Such coverage options work full circle — good employees treated well and protected by you result in better employees that help build your brand and reputation, which eventually comes back in the form of trusting, regular parents as clients.
Choices & Maintenance of Commercial Liability Insurance
Such big risks probably mean bigger price tags, right? Sometimes, but insurers will need additional information to determine coverage needs and premiums. Basic commercial liability policies typically run anywhere from $350 to $800 a year depending on coverage. It could be less or more depending on how much optional coverage is added, and on other factors, like location, the number of children you care for, the activities you sponsor, and if you’re licensed. If you own an independent location, you probably need higher limits, but the recommended minimum liability coverage for any business is $300K.
If you operate out of your home, consider an addendum to your homeowner’s policy, but don’t be surprised if you run into some roadblocks when it comes to childcare and homeowners insurance. Insurers tend to shy away from insuring homes that any business is ran out of, but a childcare business is the icing on the high-risk cake for insurers. Even non-commercial insurers know children can be bulls in china shops, so they’re often not keen on tons of children under one roof which serves as a residence and business. Be prepared for extremely high premiums and possibly ineligibility, even with some large insurers.
Home or away though, there are numerous endorsements and addendums that can be added depending on needs. It isn’t a puzzle that can be put together as easily as the Disney Princesses puzzles your charges do, but the time is worth it.
Don’t Cut Without Scissors
Insurance coverage, that is. That doesn’t mean to take scissors to the insurance policy that put you to sleep after reading it either. You may be tempted to cut coverage down to attain cheaper prices, but do not do this under any circumstance. Kids will be kids — skimping on coverage may lower premiums a little, but that won’t stop children from — quite simply — being children. If you want to save money, consider raising deductibles. Despite popular belief, when you choose coverage limits, that amount really is all you’re covered for — insurers don’t make exceptions. When your insurer says you’ve maxed out your policy limits, you’re required to pay the rest out of pocket. For the price of a new Barbie doll, you could have higher coverage limits, saving you thousands and thousands of dollars.
Think of insurance as your form of daycare. If you have it, it’s looking out for you in the event of less-than-desirable situations. If you find yourself short-handed while working with so many children one day (certainly a talent and challenge), you may not be able to sing a little jingle prompting an insurance agent to magically appear and offer a hand in passing out cookies and juice. However, if one of the aforementioned situations or others occurred, you’ll have something that could prove to be more helpful than a childcare provider with eight arms — and any childcare provider knows how valuable that would be.
Follow Desiree on Twitter @DesireeBaughman.