You’ve properly registered, licensed or certified your home childcare business according to the requirements in your state and are ready to get to work. Before allowing a child to walk (or crawl) into your home, consider a few essentials for your business liability insurance.
Liability Coverage
The law in some states may not require you to carry insurance for your home childcare business but operating such a business without at least some essential liability insurance is extremely dangerous and could cause irreparable financial harm. Liability insurance covers claims of property damage and bodily injury for which your business is responsible. A single, severe injury to a child could result in millions of dollars in damages, medical bills, rehab costs, pain and suffering or other expenses. And depending on how you’ve decided your business should legally operate—for example, as a sole proprietorship or a corporation, and so on—you may also become personally responsible, thus putting personal assets at risk, for any claims of liability against your business and resulting damages.
To determine how much business liability insurance is adequate for your business, you’ll need to start with two questions:
1) How comprehensive do you want your coverage to be? There are many choices of policies for your home childcare business, and some will offer more extensive coverage than others. For example, some may cover injuries resulting from special events like parties or field trips while others may specifically exclude such activities. Discuss coverage options with your Trusted Choice® Independent Insurance Agent.
2) How high should your limits of liability be? Severity of a claim is unpredictable, so there’s no way to say how much is enough. Your Trusted Choice® Independent Insurance Agent can provide you with the cost of a base limit of liability—such as $1 million. The cost to exponentially increase this limit may be less than you think.
Medical Insurance
Business liability insurance is essential should your business be legally responsible for an injury to a child in your care. It may also be possible to secure a type of medical insurance—often called “medical payments” or “medical expense” insurance—designed to pay an injured person’s medical bills regardless of fault. Some business liability policies offer a small amount of this coverage—such as $1,000–automatically while others may include or allow for the purchase of a much higher limit.
A Few Potential Gaps
While it’s true that business liability insurance policies vary, there are some common characteristics —and that could pose problems for you. For example, if your home has a swimming pool or a trampoline, you may have more difficulty finding coverage for your home childcare business. In addition, if you have a dog, you may find that many insurance companies will decline to offer coverage, depending on its breed.
It’s also important to remember that the liability insurance policy for your home childcare business likely will not cover injuries to your own children and thus should not be viewed as an alternative to a family health insurance policy.
Insured? Prove It!
As more consumers become educated about the importance of insurance, it’s increasingly likely that a potential customer will require you to furnish proof that your business is insured. You can easily accommodate such requests with a certificate of insurance (COI). Even if you are not asked by a potential customer for a COI, consider furnishing one anyway. A COI can help a potential customer feel more comfortable leaving their child in your care, and it could also create a competitive advantage for your business.
Rely on Your Insurance Experts
Simply put, it’s far too risky to operate a business entrusted with the well-being of children without adequate liability insurance. For more information, contact your Trusted Choice® Independent Insurance Agent.