What types of commercial daycare insurance are available for child care businesses? Learn about the many risks daycares face - and what coverages are available to protect them from lawsuits and damaged property.
Commercial Daycare Insurance
Day care centers provide care to babies and children while their parents are working. Some offer part-time drop-in care while parents are exercising, shopping, or doing other activities. Others offer before-school or after-school care for older children.
Services include at least one meal a day, snacks, activities, naps, indoor and outdoor play areas, and various learning opportunities. They may take students on field trips.
These facilities are generally open five days a week but do not offer overnight stays. Prescribed medication can be administered, but most day care centers do not have staff nurses. In-home day care providers were usually written on homeowners policies.
Operations are generally subject to state licensing, although some states exempt those serving a small number of children or those run by religious institutions. The license issued establishes the number and ages of children who can be cared for, as well as the adult to child ratio.
This article discusses the commercial daycare insurance options available for childcare providers for the multitude of risks they face on a daily basis.
Childcare Premises Liability Exposures
Premise risks are extremely high due to the ongoing presence of young children. To prevent slips, trips, or falls, all areas must be well maintained with floor covering in good condition. The number of exits must be sufficient and well marked, with backup lighting in case of power failure.
Parking lots and sidewalks need to be in good repair with snow and ice removed, and generally level and free of exposure to slips and falls. The adult/child ratio should be low enough to permit adequate supervision. Evacuation drills should be conducted regularly. Procedures should be posted that address all emergencies, with instructors and aides trained in their use.
References for all employees and volunteers must be verified, including criminal background checks. Access to the building must be limited during operating hours to prevent kidnapping and to keep children from wandering away. The procedures in place for delivery and pickup or release of children to adults must be followed carefully.
Playground equipment must be well maintained to prevent injuries -in fact, commercial daycare insurance carriers will require this. Children learn by touching and sharing, which increases the spread of communicable diseases to others. Immunizations for each child should be required, along with emergency medical contact information. Written policies must be established that address when a child is too ill to attend and when the facility will contact parents or medical emergency providers in case of illness or an accident.
Child Care Abuse And Molestation Exposures
Abuse and molestation exposures must be considered when employees supervise children. The abuser is never covered under the center's policy. While there is some coverage for the facility where the abuse takes place, it is very limited.
More comprehensive coverage should be purchased from specialized commercial daycare insurance markets. The facility is responsible for taking all possible care to protect students from predatory adults and older students through background checks, monitoring, supervision, and by reporting all allegations of abuse to the proper authorities. The more vulnerable the potential victim, the more vigilant the facility must be.
Childcare Property Exposures
Child care property risk exposures include an office, kitchen, classrooms, and outdoor play areas. Ignition sources include electrical wiring, stoves for cooking, and heating and air conditioning equipment. All wiring must be well maintained and up to code. Overriding circuit breakers and fuse boxes should not be allowed.
The high volume of paper, craft supplies, toys and other items contribute to the spread of fire. Wood and/or plastic furnishings increase the fire load. Most equipment is susceptible to and easily damaged by fire. While food preparation is generally limited to stovetop or microwave cooking, any cooking increases the fire loss potential. This is why commercial daycare insurance is so important.
Inland Marine Exposures
Inland marine exposures are from accounts receivables if the center offers credit, computers, and valuable papers and records for students' records. Duplicates of all data should be made and stored off premises.
Business Auto Exposures
Auto exposures are very high if the facility transports children to and from their homes or to off-premises activities. All drivers must have the appropriate license for the type of vehicle used to transport children and have acceptable MVRs.
Car seats must be used as required by state law. Appropriate supervision should be provided when multiple children are transported. All vehicles must be properly maintained and maintenance records kept at a central location.
Daycare Workers Compensation Exposures
Workers comp exposures are high from hernias, back sprains, and strains from lifting, slips and falls, and exposure to communicable diseases. All employees should have up-to-date immunizations to prevent the spread of communicable diseases.
Children can become unruly and injure employees by biting, hitting, kicking, and pulling hair or earrings. Employees should be trained in how to deal with these students and have access to emergency numbers in case of problems to keep commercial daycare insurance costs down. Unauthorized visitors can pose a threat to employees as well as children.
Daycare Crime Exposures
Crime exposures are primarily from employee dishonesty. Hazards increase without proper background checks. All job duties, such as ordering, billing, and disbursing, should be separate and reconciled on a regular basis.
Receipts should be issued for cash payments received from parents. Bank deposits should be made on a timely basis to limit the buildup of cash on the premises. Audits should be performed at least annually.
Commercial Daycare Insurance - The Bottom Line
We hope this article on commercial daycare insurance was informative. The minimum recommended commercial daycare insurance coverage includes: Business Personal Property, Employee Dishonesty, Accounts Receivable, Computers, Valuable Papers and Records, General Liability, Employee Benefits Liability, Umbrella Liability, Business Auto Liability and Physical Damage, Hired and Non-owned Auto Liability, Workers Compensation. Child care business insurance cost, daycare insurance requirements, 3 types of home daycare insurance and home daycare insurance companies.
Further Reading On Daycare Insurance
- Commercial Daycare Insurance
- Daycare And Childcare Insurance Quote
- How Much Does It Cost To Insure A Daycare?
- Unlicensed Daycare Insurance
- What Does Daycare Liability Insurance Cover?
Insurance Classification Of Daycares
Insurers classify childcare businesses using several coding systems. You can wind up paying more for your insurance if your childcare is not properly classified - like an in-home daycare being coded as a commercial center. Below are the three most commonly used coding systems for commercial daycare insurance:
- ISO General Liability Codes: 41715, 41716
- NAICS CODE: 624410 Child Day Care Services
- SIC CODE: 8351 Child Day Care Services
- Suggested Workers Compensation Code: 8869
SIC Code 8351 - Child Day Care Services
Here is the official OSHA SIC code description for daycare:
Establishments primarily engaged in the care of infants or children, or in providing prekindergarten education, where medical care or delinquency correction is not a major element. These establishments may or may not have substantial educational programs. These establishments generally care for prekindergarten or preschool children, but may care for older children when they are not in school. Establishments providing babysitting services are classified in Industry 7299. Head Start centers operating in conjunction with elementary schools are classified in Industry 8211.
- Child care centers
- Day care centers, child
- Group day care centers, child
- Head Start centers, except in conjunction with schools
- Nursery schools
- Preschool centers