EARLY CARE & EDUCATION LAW UNIT
Publication Date: July 2013
CHILD CARE LIABILITY INSURANCE
Importance of Insurance
This handout provides child care businesses with information about insurance. Purchasing insurance is a
method of shifting risk from your child care business to an insurance company in exchange for a
premium, which is the payment you make for an insurance policy. If you have insurance, your insurance
company may pay the cost of certain accidents that occur. As a child care provider you must be
proactive both about risk management and being responsive to the families in case an accident occurs
while a child is under your care. When an accident occurs, if you do not have insurance you may be
exposed to a substantial financial loss.
Insurance Legal Requirements for Family Child Care Providers
In California, family child care providers are required to have one of the following three:
1) Liability insurance ($100,000 per event or $300,000 collectively) covering injuries to
clients and guests due to the negligence of the licensee or employees; OR
2) A bond in the amount of $300,000; OR
3) Written affidavits signed by parents of children enrolled in your program demonstrating
their acknowledgment of your lack of insurance.i
Liability insurance generally covers payment for accidents that are covered by your insurance policy as
well as any legal costs of defending you. Although the law does not require that you carry liability
insurance, Public Counsel strongly recommends that you purchase insurance to protect yourself and
your business. While you have the option to obtain written affidavits from parents of children enrolled
in your program, this does NOT guarantee that a parent will not sue you if their child is injured in your
program. The parents’ affidavits merely acknowledge that you do not carry liability insurance.
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610 S. Ardmore Ave., Los Angeles, CA 90005
P: 213/385-2977
Other Types of Insurance
Besides liability insurance, there are other types of insurance you may want to consider. The following is
not an exhaustive list but provides child care providers with a short list of the type of insurance policies
you may want to inquire about when talking to an insurance broker.
1. Worker’s Compensation Insurance covers injuries to employees in the operation of the business
and is required by CA state law if your business has any employees.
2. Business Automobile Insurance covers damage to property or bodily injury caused by the
operation of your vehicle in your business, such as during field trips.
3. Business Property Insurance covers damage to your own property caused by your child care
business.
4. Business Interruption Insurance covers some income lost if your home is damaged in a natural
disaster and you have to stop conducting business in order to make repairs.
5. Crime and Fidelity Insurance covers situations in which your business is the victim of things such
as robbery or employee dishonesty and theft.
6. Umbrella Insurance Policies can provide extra coverage if the cost of an accident, such as the
death of a child, exceeds the policy limits of your other insurance policies.
More information, including a glossary of common insurance terms, can also be found in the guide to
commercial insurance at the CA Department of Insurance website: http://www.insurance.ca.gov/0100consumers/0060-information-guides/0030-business/CommercialInsurance.cfm.
Tips for Talking with Insurance Carriers and Brokers and Reviewing Insurance Policies
This section provides a brief overview of some ideas to consider when talking to an insurance
broker/carrier and purchasing a policy. Please keep in mind that these are only general suggestions and
that this section does not discuss all of the many considerations that may be relevant to purchasing the
best policy for your business.
1) Before calling an insurance broker, gather the following information: who lives in the home,
who will be in the home during the hours of child care, whether your landlord should be covered
by the policy, how many children will be in your care, whether you will drive children on field
trips, whether you will dispense medication, and what areas or aspects of the home have a
chance of creating injury to children in care or to the property of others (such as a pool or pet).
It is important to disclose detailed information about your business and home when buying insurance.
If you do not tell the insurance company about hazards or risks on your property, the insurance
company may claim that you were not honest on your application and refuse to pay for an accident for
which your insurance policy normally provides coverage.
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610 S. Ardmore Ave., Los Angeles, CA 90005
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2) Before calling an insurance broker, look over your other insurance policies (such as
homeowner’s and auto insurance) and get a sense of what coverage they provide.
If provided with complete information about your business and other insurance policies, insurance
brokers should be able to help you identify what levels of liability insurance or other types of insurance
you may want to buy to ensure that you are protecting your business from any risks that are present in
the operation of your child care. Consider using the same broker and insurance company for all of your
insurance policies, including homeowner’s, auto, and business liability since they will be familiar with all
the different policies you have purchased and what is covered by each policy.
3) Before calling an insurance broker, glance over the glossary of insurance terms in the guide to
commercial insurance at the California Department of Insurance website:
http://www.insurance.ca.gov/0100-consumers/0060-information-guides/0030business/CommercialInsurance.cfm.
It is good to be familiar with common insurance terms and procedures during your conversation with
your broker/carrier. It is important to understand key terms in order for you to know exactly what the
policy will cover so that you can determine whether the policy will adequately protect you from the risks
of running your child care business. Always make sure to ask follow up questions if you do not
understand something.
4) Before calling an insurance broker, think of a few likely and unlikely accidents that could occur in
the operation of your child care business.
Before speaking with an insurance broker, think of what types of accidents you would like your
insurance policy to cover. By talking about a few scenarios with the broker, you can get a better sense of
how the policy will function if an accident occurs and you need the insurance company to make a
payment.
5) During your conversation with a broker, ask whether the policy will offer coverage on a “claims
made” or “occurrence” basis.
A “claims made” policy will only pay for accidents that may be covered by your insurance policy and
which the insurance company is notified of during the time you have insurance coverage. An
“occurrence” policy will pay for accidents that may be covered by your insurance policy and that take
place during the time you have insurance coverage, regardless of when the insurance company is
actually notified of the accident. Therefore, if you do not currently have insurance but you notify your
insurance company of an accident that occurred when you had insurance, the occurrence policy would
cover the accident as long as it occurred when you had insurance and may have been included in the
terms of your coverage.
6) At the end of your conversation with a broker, request a copy of the insurance policy so you can
review it before purchasing insurance.
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610 S. Ardmore Ave., Los Angeles, CA 90005
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You have a right to and should review the actual insurance policy before you purchase it. Some
companies may send you a summary of your benefits rather than the actual policy; you should demand
a copy of the full policy and read it carefully before purchasing coverage.
Make sure you know what type of insurance coverage you are getting, what accidents it covers and the
maximum amount your insurance company is willing to pay for costs related to an accident. There are
many things to look for when reviewing an insurance policy. We cannot list all of them here, but check
for the following: that the correct people are covered by the policy, that the policy is for the correct
number of children in care, and that you know whether certain types of accidents will be excluded from
coverage (like pet-related injuries). The table at the end of this document also may give you an idea of
the types of factors to look for when reviewing your policy.
7) If you have any questions after reviewing the policy, call your insurance broker or carrier and ask
them to go over the questions that you have.
If you do not understand any part of your policy, be sure to call your insurance broker or carrier and ask
them to explain. It is very important that you understand exactly what risks are covered by your
insurance policy so that you can adequately protect your assets from the risks of running your child care.
8)
Keep your insurance carrier updated about any changes to your business.
If there are big changes to your business (such as caring for a larger number of children or installing a
trampoline) contact your insurance carrier to let them know. You may have to purchase expanded
coverage to cover your new situation, but if you do not let the insurance company know about changes
to your business they can claim that you misrepresented the conditions of your business and refuse to
pay for an accident that would usually be covered by your insurance policy.
Liability Insurance Carriers
The following table provides you with a list of insurance carriers that provide liability insurance coverage
for family child care homes. This list of available carriers is not an exhaustive list and is only meant to
provide you with general information. This is not a referral.
While we encourage you to obtain liability insurance coverage, Public Counsel’s does not endorse or
recommend any particular insurance company, including any of the companies on this list.
We cannot and do not guarantee the accuracy of any of the following liability insurance carrier
information, and urge you to contact these companies directly if you are interested in their policies. You
should carefully review the policy with the company’s agent and should not rely on the information in
this listing if it does not match the terms of the policy you are offered or decide to purchase.
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610 S. Ardmore Ave., Los Angeles, CA 90005
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Contact
Information
Cost of premium
for a
$100,000/$300,000
policy for Small
Family Child Care
business
Cost of premium
for a
$100,000/$300,000
policy for Large
Family Child Care
business
“Admitted”
insurance company
in CA?
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Assure Child Care
American
Federation of DailyCare Services (aka
THOMCO,
Markel)
Day Care Insurance
Services, Inc.
New England
Insurance Services,
Inc.
855-818-5437
612-486-4752
Policies can only be
purchased online at:
(800) 624-0912
(818) 905-0311
(860) 844-8288
(888) 845-8288
www.afds.com
Rafael Mendoza
Ext 108
For Questions, call
(888) 515-8537
http://dcins.com/index.
php
http://www.neisinc.co
m/childinc.htm
1-8 kids = $430
1-8 kids = $325
Premium increases
with each additional
child
1-8 kids = $376 + $45
(membership fee to
“Child Care Services
System”)
*this rate is for policies
with $300,000/$600,000
limits
7-14 kids = $672 + $45
(membership fee to
“Child Care Services
System”)
*this rate is for policies
with $300,000/$600,000
limits
Yes
1-6: $467*
7-12: $700*
13-18: $905*
1 kid: $438
8 kids: $676
*premium reduced by
$5.95 for each child
below the maximum
see above pricing
7-14 kids = $561
Premium increases
with each additional
child
9 kids: $682
18 kids: $905
Yes
Yes
Lic # 0799352
610 S. Ardmore Ave., Los Angeles, CA 90005
Yes
Lic # NAIC 38970
P: 213/385-2977
Assure Child Care
American
Federation of DailyCare Services (aka
THOMCO,
Markel)
Day Care Insurance
Services, Inc.
New England
Insurance Services,
Inc.
Does coverage
include
Professional
Liability/Negligent
Supervision?
Yes
Yes
Yes
Yes
Are all residents of
the household
covered for
negligence
(including those not
employed in the
child care
operation)?
Are all residents of
the household and
employees also
insured for child
abuse coverage?
No, only employees are
covered.
Immediate family
living in the home are
covered.
Yes
No, only individuals
performing functions
of child care are
insured, and spouse if
sole proprietor
Yes, employees are
covered but household
residents are only
covered if they are
immediate family.
Yes
$100,000 limit for each
occurrence,
$100,000 for aggregate
No, only individuals
performing functions
of child care are
insured, and spouse if
sole proprietor
Are all legal
expenses paid for
at Administrative
Hearings?
Yes, limit is $5,000
Yes, if the claim is
covered, but only up to
the policy limits
Depends on the
hearing. Abuse and
endangerment are
covered, but fingerprint
and paperwork are not
No legal expenses are
paid for administrative
hearings only. Legal
expenses are paid if
claim is filed.
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If the person has a
boarder/renter, they are
ineligible for a policy
No, only employees are
covered.
610 S. Ardmore Ave., Los Angeles, CA 90005
P: 213/385-2977
Assure Child Care
American
Federation of DailyCare Services (aka
THOMCO,
Markel)
Day Care Insurance
Services, Inc.
New England
Insurance Services,
Inc.
Are claims covered
for libel or
slander?
Yes
Yes
Yes
Yes
Are there
exclusions or
limitations for
animals in the
family child care
home?
The policy covers bodily
injury caused by animals
$25,000 per
occurrence/$50,000
aggregate limit
All animals in care and
control of the provider
are excluded, but other
neighbor’s pets are
covered
Exclusion for Akitas,
Bull Mastiffs,
Dobermans, German
Shepherds, Pit Bulls, &
Rotweilers.
All injuries due to pet
animals are excluded.
Injuries due to pet
animals are covered
under a separate policy
called Accident Policy.
Yes, if licensed
Yes, up to 18” and not
exceeding 8’ x 8’
Are swimming
pools on the
premises covered?
Yes
Are swimming
pools off the
premises covered?
Yes
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Pet must be kept
separate from the
children at all times.
Wading pools are ok,
but swimming pools
are excluded.
No
Trampolines excluded
Yes
610 S. Ardmore Ave., Los Angeles, CA 90005
Yes
P: 213/385-2977
Assure Child Care
American
Federation of DailyCare Services (aka
THOMCO,
Markel)
Day Care Insurance
Services, Inc.
New England
Insurance Services,
Inc.
What is the
deductible that the
provider must pay
for each claim?
None
None
None
None
Does the policy
cover nonemergency
extended hours of
care?
Yes
Yes, if less than 24
hours.
Yes, but there may be
an additional charge if
regular operation is
over 17 hours per day
or provider operates on
Saturday or Sunday.
Yes
What is the
maximum limit per
child for accident
medical payments?
Medical = $10,000
Dental = $1,000
$20,000 per child per
accident, $10,000 for
dismemberment,
$5,000 for accidental
death
$20,000 per child, per
accident
Will the policy pay
for accidents
regardless of other
insurance
coverage?
Yes
Yes
Yes
Yes
Is there an
additional charge
to cover your
landlord?
No
No
Yes, $50
No
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If no assistant, provider
can only provide 16
hours of care a day.
Medical = $10,000 per
incident.
Accident and Health =
$20,000 per incident,
$250,000 aggregate
610 S. Ardmore Ave., Los Angeles, CA 90005
P: 213/385-2977
Assure Child Care
American
Federation of DailyCare Services (aka
THOMCO,
Markel)
Day Care Insurance
Services, Inc.
New England
Insurance Services,
Inc.
Can additional
coverage be added
for transportation?
No
No
Yes. Includes insured
person, employees, and
volunteers’
automobiles.
No
Can coverage for a
non-owned auto be
added?
Yes, for $112
No
Yes
No
Payment plan
available?
Yes
Yes
Yes
Yes, through Pay Pal
account
This document was prepared by Public Counsel’s Early Care & Education Law Unit in July 2013 and is
meant to provide general information. This document is not all-inclusive and is not intended to
provide any individual or entity with specific legal advice. Receiving this document does not create
any lawyer-client relationship. For questions or comments, please call the ECE Law Unit’s Intake line
at 213/ 385 2977 ext. 300.
© 2013 by Public Counsel. Please contact Public Counsel if you plan to make multiple copies and/or
plan to charge for distribution of this product.
i
See California Health and Safety Code § 1597.531.
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610 S. Ardmore Ave., Los Angeles, CA 90005
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