Insurance is an essential part of a daycare or childcare business, whether home-based or not.
Most jurisdictions require proof of insurance in order to issue a child care operating license. Even if you run a home-based
daycare business, your homeowners insurance policy may stipulate that you need a business insurance policy or a specific
endorsement to operate the business.
In the early planning stage of your business, you will need to contact an insurance agent who is knowledgeable about your
area of operation. Ask owners of similar businesses to recommend agents. Second, you will need to discuss the details of your
business, its exposures and the different types of insurance that are available to protect it. Your agent should be able to tailor
coverage that is specific to your company.
The following are examples of insurance coverage that may be important for daycare or childcare providers to consider. You
may not need all of these coverages and some can be bundled as a commercial package policy or business owner’s policy. A
bundled insurance policy could save you money. Work with your agent to ensure you have proper coverage.
DAYCARE LIABILITY INSURANCE
Daycare liability insurance is required for all childcare
providers and is designed to meet the unique needs of the
childcare business. It provides owners with liability insurance
as well as business property coverage. Liability insurance
provides coverage for court costs and legal fees associated
with a covered event. Many insurers allow business owners
to design a policy that is specific to their daycare’s unique
needs.
COMMERCIAL GENERAL LIABILITY INSURANCE
A commercial general liability (CGL) policy provides
coverage to a business for bodily injury, personal injury
and property damage caused by your business operations,
products, advertisements or completed operations. A CGL
policy shields your business from the expenses of out-of-
court settlements, litigation or rulings awarded by the courts.
PROFESSIONAL LIABILITY INSURANCE
Professional liability insurance covers your teachers and
childcare workers and their actions while on duty. If your
business is sued because a member of your staff is accused
of negligence or abuse, professional liability insurance helps
pay legal fees and settlements.
COMMERCIAL AUTO LIABILITY INSURANCE
Commercial auto liability insurance is required if your
daycare business has its own vehicles and transports children
to and from schools. Commercial auto insurance provides
liability and physical damage protection for vehicles such as
cars, trucks and vans that are used for business.
NON-OWNED OR FOR-HIRE
AUTO LIABILITY INSURANCE
If you hire a third-party shuttle service or if any of your
workers drive children in privately owned vehicles for field
trips or other outings, your business can be held responsible
for injuries or property damage if an accident occurs. Non-
owned or for-hire auto liability insurance can protect you in
these instances.
CORPORAL PUNISHMENT
LIABILITY INSURANCE
A daycare business is liable if one of its employees strikes
a child or is accused of administering corporal punishment.
Corporal punishment liability insurance provides financial
protection if your business faces such a lawsuit.
DAYCARE INSURANCE COVERAGE
BUSINESS
INSURANCE
ABUSE AND MOLESTATION
LIABILITY INSURANCE
Abuse and molestation liability insurance protects your
business from the financial losses caused by allegations
of abuse or sexual molestation against your employees. It
includes the legal and medical fees involved in the litigation
process, as well as court-mandated settlement fees.
FLOOD AND SEWER BACKUP INSURANCE
A flood is a common occurrence and can result in serious
loss exposure for businesses. Floods result from greater
precipitation than the land can drain. The four most
common causes of floods are rising water levels, ice jams,
obstructed sewer drains and flood control system failures.
The National Flood Insurance Program administered by
the Federal Emergency Management Agency is the largest
flood insurance underwriter in the United States. There
also are commercial and surplus lines insurers that provide
coverage for flood exposures. Most homeowners and
business insurance policies do not cover flooding or sewer
backup unless specific coverage is added to the policy by an
endorsement.
WORKERS’ COMPENSATION/EMPLOYER
LIABILITY INSURANCE
Workers’ compensation pays most of the fees, such as
medical expenses, when an employee gets sick or injured
on the job. The employer liability insurance also protects
your business if an employee files a lawsuit claiming the
employer’s negligence caused the injury or sickness.
EMPLOYMENT PRACTICES
LIABILITY INSURANCE
Employment practices liability insurance covers you and
your business against allegations of wrongful termination,
discrimination and harassment claims filed by employees.
BUSINESS PROPERTY INSURANCE
Business property insurance protects your company’s
physical assets, inventory, office space or warehouse. This
coverage can help protect your business belongings from fire,
explosions, burst pipes, theft, vandalism and other identified
perils. It will replace stolen office equipment, repair damage
to your office if caused by a covered peril and replace loss
of income while physical structures or office space are under
repair.
CYBER LIABILITY INSURANCE
Cyber liability insurance protects businesses and individuals
from internet-based risks such as hacks and information
breaches. Policies can cover first-party loss incurred
directly by your company, and third-party loss such as the
unauthorized access of consumers’ data stored by your
company.
UMBRELLA LIABILITY INSURANCE
Umbrella liability insurance provides additional liability
protection. It covers claims made against you that might
exceed your insurance policy’s liability limits. Additionally,
it may provide coverage for claims made against you that
are not listed under your regular insurance policies, such
as slander and libel.
BOND
A bond issued by a licensed security company may be needed
when a license or permit is required by federal, state or local
municipalities to ensure that the services promised by a
business are completed according to regulation. Common
types include surety, construction, commercial, notary and
contractor bonds. To determine whether a bond is needed,
check with the licensing or permitting authority.
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MISSION
The mission of the Department of Insurance,
Securities, and Banking (DISB) is three-fold: (1)
cultivate a regulatory environment that protects
consumers and attracts and retains financial
services firms to the District; (2) empower and
educate residents on financial matters; and (3)
provide financing for District small businesses.
REMEMBER
Insurance gives you the peace of mind to operate
your business knowing it is protected from
accidents, theft, legal matters and natural disasters.
The right policy, or combination of policies, helps
your business overcome a situation that has the
potential to drain your resources and take your
focus away from your operation. Check with a
licensed insurance agent or a licensed insurer to
discuss your business insurance needs.
ONE MORE THING TO KNOW
You can perform an online search to locate an
agent or insurer. Access the insurance licensing
portal on the DISB website or contact our office
to verify whether the agent or insurer is licensed
or authorized to conduct business in the District of
Columbia.
If you have questions about insurance, please call
DISB at 202-727-8000 or visit disb.dc.gov.
