Childcare Insurance: What Coverage Your Center Needs
Licensed childcare centers are required to carry specific types of insurance as a condition of their license. This guide covers every major coverage type, what each one costs, and what questions to ask your insurance agent.
Last updated: April 2026
Compiled by the TotReady Research TeamGeneral Liability Insurance
General liability (GL) is the foundation of any childcare insurance package. It covers bodily injury to children, parents, or visitors on your property, property damage caused by your operations, and related legal defense costs.
- Covers injuries to children on your playground or inside the facility
- Pays for property damage you or your staff cause to others
- Covers legal defense costs even if the claim is ultimately dismissed
- Most states require minimum $1 million per occurrence / $2 million aggregate for licensing
- Certificates of insurance (COIs) are typically required by landlords and licensing agencies
Professional Liability Insurance (Errors & Omissions)
Professional liability — also called errors and omissions (E&O) — covers claims that arise from the professional services you provide. In childcare, this includes allegations of improper supervision, failure to follow licensing regulations, or negligence in caring for a child.
- Covers negligence claims related to your supervision and care practices
- Protects against allegations of improper staff training or program delivery
- Pays legal defense costs for professional negligence lawsuits
- Not included in standard general liability policies — must be added separately
- Often bundled with GL in childcare-specific commercial packages
Workers' Compensation Insurance
Workers' compensation covers medical expenses and lost wages for employees who are injured on the job. Childcare workers face real risks: lifting children, slips and falls, and exposure to illness.
- Covers medical treatment for work-related injuries and illnesses
- Pays a portion of lost wages while an injured employee recovers
- Required in virtually every state once you have one or more employees
- Premiums are calculated per $100 of payroll based on job classification codes
- Failure to carry required workers' comp can result in fines and personal liability
Commercial Property Insurance
Commercial property insurance covers your building (if you own it), equipment, furniture, supplies, and other physical assets against fire, theft, vandalism, and other covered perils.
- Covers damage to the building structure (if owned) from fire, storm, or vandalism
- Protects furniture, equipment, toys, and supplies
- Landlords typically require tenants to carry tenant's property insurance
- Business personal property coverage protects movable assets
- Consider replacement cost vs. actual cash value — replacement cost pays more but costs more
Commercial Auto Insurance
If your program transports children — for field trips, school pickup, or any other purpose — you need commercial auto insurance. Personal auto policies do not cover vehicles used commercially to transport passengers for a fee or as part of a business operation.
- Required whenever children are transported in a vehicle owned or operated by the center
- Personal auto policies explicitly exclude commercial transportation of children
- Covers liability for accidents, medical payments, and uninsured motorists
- State childcare licensing typically requires proof of commercial auto before allowing transportation
- Drivers must meet your state's requirements (background check, valid license, driving record review)
Abuse & Molestation Coverage
Abuse and molestation (A&M) coverage is one of the most important — and most commonly overlooked — insurance protections for childcare centers. Standard GL policies typically exclude these claims. A separate A&M endorsement or standalone policy fills that gap.
- Standard general liability policies exclude sexual abuse and molestation claims
- Covers legal defense costs and settlements related to allegations of abuse
- Available as a rider on most childcare commercial packages
- Some state licensing agencies require it; others strongly recommend it
- No amount of staff screening eliminates the need for this coverage
Business Interruption Insurance
Business interruption insurance replaces lost income when your center is forced to close temporarily due to a covered event — fire, flood, or significant property damage. Without it, you still owe rent, payroll, and fixed expenses while generating zero revenue.
- Covers lost revenue during a covered closure (fire, flood, major equipment failure)
- Pays ongoing fixed expenses — rent, utilities, and some payroll — during the closure period
- COVID-19 highlighted significant gaps in standard BI policies; verify pandemic coverage carefully
- Often bundled with commercial property as a Business Owner's Policy (BOP)
- Coverage period and waiting periods vary; review the policy terms carefully
Childcare insurance cost summary
These are typical annual cost ranges for licensed childcare centers. Actual premiums depend on your center size, state, payroll, vehicle use, and claims history.
| Coverage Type | Typical Annual Cost | Required? |
|---|---|---|
| General Liability | $500 – $2,000/yr | Required (most states) |
| Professional Liability (E&O) | $300 – $800/yr | Strongly recommended |
| Workers' Compensation | $500 – $1,500/yr per employee | Required (most states) |
| Commercial Property | $500 – $2,000/yr | Required if leasing |
| Commercial Auto | $1,000 – $3,000/yr per vehicle | Required if transporting |
| Abuse & Molestation | $200 – $600/yr | Required in some states |
| Business Interruption | Often bundled | Recommended |
How to get childcare insurance quotes
General insurance agents often lack deep familiarity with childcare-specific exposures. Working with a broker who specializes in childcare or early education programs will get you better coverage at a better price.
- 1
Find a childcare-specialized commercial broker
Look for brokers who specifically mention childcare, early childhood education, or preschool programs. National carriers like Philadelphia Insurance, Markel, and West Bend have dedicated childcare programs.
- 2
Pull your state licensing requirements first
Before contacting any broker, look up your state licensing regulations to find the minimum required coverage amounts. Bring those numbers to every conversation so you can confirm the quote meets minimums.
- 3
Get quotes from at least three providers
Childcare insurance premiums can vary significantly between carriers. Comparing three or more quotes for the same coverage limits gives you real leverage.
- 4
Ask about package policies (BOPs)
A Business Owner's Policy bundles general liability and commercial property — and often business interruption — into a single package at a lower combined rate.
- 5
Request a certificate of insurance for your licensing application
Once you have coverage, request a COI listing your licensing agency as the certificate holder. Most agencies require this before issuing or renewing your license.
5 questions to ask your insurance agent
- 1.Does this policy specifically exclude or include abuse and molestation claims?
- 2.What are the per-occurrence and aggregate limits, and do they meet my state's licensing minimums?
- 3.How does the policy handle claims involving transportation — including field trips in rented vehicles?
- 4.Is there a claims-made or occurrence-based trigger, and what happens to coverage if I switch carriers?
- 5.What documentation does the carrier require to issue a certificate of insurance for my licensing application?
Document your insurance requirements in your operations manual
Your parent handbook should state what insurance your center carries and how families can obtain a copy of your certificate of insurance. TotReady's Startup Bundle includes the policy language and documentation templates you need.
See the Startup BundlePolicies + handbook + required forms · State-specific
Frequently asked questions about daycare insurance
- How much is insurance for a daycare per month?
- Childcare center insurance typically costs $250–$700 per month ($3,000–$8,000 annually) for a comprehensive package including general liability, professional liability, and workers' compensation. Home daycare insurance is lower at $100–$300 per month. Exact costs depend on capacity, location, and coverage limits.
- Is general liability insurance required to open a daycare?
- Yes. Most states require licensed childcare centers to carry general liability insurance as a condition of licensing. Typical minimum requirements are $1 million per occurrence and $2 million aggregate. Your state licensing regulations will specify the required amounts.
- What is the difference between general liability and professional liability insurance for childcare?
- General liability covers accidents and injuries at your facility. Professional liability (errors and omissions) covers claims about how you delivered your professional services — such as allegations of improper supervision or failure to follow licensing regulations. Both are recommended for childcare centers; they cover different types of claims.
- How much does childcare center insurance cost per year?
- The average childcare center pays $3,000 to $8,000 per year for a comprehensive insurance package. Small home-based programs typically pay less; larger licensed centers with transportation programs pay more. Getting quotes from at least three childcare-specialized brokers is the best way to find competitive pricing.
- Does daycare insurance cover abuse and molestation claims?
- Standard general liability policies often exclude abuse and molestation claims. Childcare centers should purchase a separate abuse and molestation endorsement or standalone policy. This coverage is available as a rider on most commercial childcare packages for approximately $200 to $600 per year.