Jessica Fox Last Updated On: February 12, 2024

Understanding Home Daycare Insurance

Working with children might be your life’s calling and when you love being around kids, it may not even feel like work. Still, the fact remains that operating a home daycare is work and you need to treat it like a business—and that means getting insurance for your business. In this case, home daycare insurance. 

If you run a small daycare out of your house or are considering running one, your standard home insurance policy may not cut it. You’ll need home daycare insurance to make sure you have adequate coverage. 

To protect yourself, your business, and the precious little people who are your clients, you must have an insurance policy that will meet the needs of your home daycare business. This is why you need additional home daycare insurance: It’ll protect you from potential lawsuits or cover unforeseen damages to your property. 

At-home child care is offered as an endorsement (also known as a rider) or an add-on to your home insurance policy, and for an entrepreneur, there’s no greater relief than knowing your business is protected from lawsuits.

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Table of Contents

Common At - Home Daycare Insurance Policies

Liability insurance for at-home daycare coverage typically includes liability coverage, property insurance, or some combination of the two. However, there are many other daycare coverage options available that largely depend on your business needs.

The question then becomes: Which home daycare coverage is best for you?

The first thing you need to determine is the scale of your daycare (i.e. how many kids can you legally care for under your state’s law?)

For at-home daycares with a handful of children, you have the option of a home insurance rider; meaning you can extend your home insurance to cover your business—but, only if you qualify. One such qualification is that the children remain on the property while in your care. This means no walks to the park. 

For larger daycares, you aren’t eligible for an endorsement, so you’ll need to assess the unique needs of your daycare (e.g. Do you have employees? Do you use vehicle transportation for the kids? etc.) and create a business insurance policy that’ll protect you from all possible lawsuits.

At - Home Daycare Insurance Policy Add-Ons

These are some of the childcare coverage add-ons available to help protect your at-home business:
  • General Liability: General liability coverage is necessary for every entrepreneur who runs a business out of their house. Anytime a third party enters your home, there’s a chance they could become seriously injured on-site (e.g. broken limbs). This opens up your business to lawsuits if you’re not sufficiently covered. In terms of at-home childcare, if an injury requiring medical treatment occurs, it’s your business that’s responsible for the bill—this is why you need general liability.
  • Professional Liability: Professional liability insurance protects you or your employees from negligence if you’re sued. Negligence could be bad advice, like mistakenly giving an allergen (e.g., nuts or dairy) to an allergic child or abuse (emotional, physical, or mental). This isn’t something pleasant to think about. In fact, it’s horrifying—but you need to be covered.

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Coverage Options for Child Welfare

  • Abuse and Molestation Liability: This coverage can help protect you or staff members accused of abuse or molesting a child while in your care. For lawsuits, your insurance will cover lawsuit settlements.
  • Error and Omissions Liability: If your business is accused of failing to provide a standard level of care, your insurance policy will pay the settlement if you’re found guilty.
  • Corporal Punishment Liability: Should your establishment be accused of hitting a child, then your plan will pay out the settlement if you’re found guilty. Some policies may offer to help pay legal fees.
  • Accident Insurance: As the name suggests, if a child is injured while attending your daycare, accident insurance will cover any associated medical bills. However, daycare providers have two types of accident insurance to choose from:
    • Accidental Medical Expense (AME): Your policy will pay all medical bills to the family of the injured child, including ambulance, hospital bills, and other associated costs.
    • Accidental Death and Dismemberment (AD&D): Although the coverage is disturbing, it’s beneficial insurance for daycare operators. If accidental death or serious injury (loss of limb) occurs, your policy will pay a set benefit to the child’s family.

Coverage Options for Cars

  • Commercial Auto Liability: If you own a vehicle allocated for your childcare business, having commercial auto insurance will protect you should you end up in an accident while transporting the children in your care.
  • Non-Owned or For-Hire Auto Liability: For at-home childcare providers using their vehicle to transport children, this coverage will cover injuries or damages to your car if you get into an accident.
  • Property Coverage: For additional protection to your daycare equipment, you’ll want property coverage as it will cover the cost of repair or replacement should unforeseen damages occur.
  • Umbrella Coverage: Umbrella coverage is like insurance for your insurance. If you reach your maximum payout for liability, auto, or home insurance, then umbrella coverage kicks in to cover the rest.
You should consider adding umbrella coverage to your home daycare if you:
  • Fear “Big Lawsuits”: If you don’t think your general liability is enough to protect you from a “big lawsuit,” then add-on umbrella insurance.
  • Have Multiple Employees: If your operation is large enough to have staff, should one become injured, umbrella coverage will beef up worker’s compensation if it falls short.
  • Rent Space: Usually, commercial landlords will request daycares to carry higher liability, so one way to achieve this is by having umbrella insurance.
  • Mind Well-Off Families Children: Children from well-off families are more likely to sue; so having umbrella insurance will protect your business.
  • Workers Compensation Coverage: If your daycare has employees, you must have worker’s compensation coverage as on-site injuries can happen. Workers comp will help foot the bill for medical expenses and lost wages.

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Can I Add At-Home Daycare Insurance to My Home Insurance?

The short answer is yes. You can add a rider or endorsement to your home insurance, but only if you meet the insurance provider’s eligibility requirements. An endorsement extends your homeowner’s insurance policy (property and liability coverage) to your at-home childcare business. Usually, there is a child cap of three children allowed when you add an endorsement to your home insurance policy.

For entrepreneurs with up to three children in their care, this would be a suitable option. But, only if the children remain on the premises.

If you care for more than three children, take the children on trips outside the house or transport the children via vehicle, then adding a childcare endorsement is not an option.

Endorsements don’t cover:

  • Injuries off the property
  • Injuries during transportation (without the proper insurance)
  • Lawsuits that exceed your payout limit
  • Minding more than three children
  • If your state disallows childcare endorsement

How Much Does Home Daycare Insurance Cost?

There are so many types of home childcare businesses that it’s impossible to assign a specific dollar value. The cost of at-home childcare insurance depends on how small or large your business is:
  • Small Scale Operations: The average annual cost, depending on the coverage, is between $400 – $1350.
  • Commercial Facility: The average annual price depends on the business insurance package you build and is roughly between $1,000 – $3,500.

Exclusions to In-Home Daycare

Certain exclusions can prevent you from being eligible for at-home childcare coverage. The most common restrictions are:
  • Number of Children: You can only purchase at-home insurance if your daycare keeps to the prescribed number of children allowed in your state. For smaller operations (depending on your state), your child limit is capped at six kids.
  • Children Only: In-home daycare is only available for childcare, and therefore doesn’t apply to caring for adults.
  • Attractive Nuisances: Essentially, you aren’t allowed to have pools, trampolines, or other potentially dangerous climbing equipment on the property.

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Finding the Right Home Daycare Coverage For You

Deciding on the right at-home daycare insurance may seem like a challenge, but it’s essential if you want to protect yourself from potential lawsuits and your little clients in the event of an accident. The best place to start is by identifying the scale of your operation (small or large) and then go from there. 

For small businesses, you have the option of adding daycare coverage as a home insurance endorsement. 

Larger daycares may want to add things like worker’s compensation and accident insurance to pay for medical expenses associated with on-site injuries. Larger daycares also need to create a business insurance policy that fits their needs while providing them with complete protection from lawsuits.

Get a free quote for home daycare coverage now. We’ve curated a list of the best providers of this niche insurance and will match you with a company that will give you the best coverage for your specific needs at the best possible price. 


Your daycare insurance coverage depends on the scale of your operations and unique needs. For smaller businesses, you may only want an endorsement, while larger daycares may need many add-ons.

Home endorsement is only available for at-home daycare providers, while any other coverage you add to your policy is considered an add-on.


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