Insurance You Need to Open a Child Care School

What insurance child care schools must have

Child care schools need several types of insurance to operate legally and protect themselves from liability. The specific requirements vary by state, but most states require general liability insurance, abuse and molestation coverage, and workers' compensation insurance if you have employees. Some states also mandate vehicle insurance if you transport children, and many require proof of insurance before you receive your license.

The exact coverage amounts and types depend on your state's child care licensing rules. Your state's department of health, human services, or child care licensing office publishes these requirements in their regulations. You will need to check your specific state's rules before you buy any policy, because what one state requires another may not.

Insurance is separate from your business license and background checks — it is one of several things you must have in place before you can legally operate. Most child care centers discover their insurance requirements when they contact the licensing office to begin the approval process.

Key Takeaways

• General liability insurance protects you if a child is injured at your facility and the parent sues for medical costs or damages.
• Abuse and molestation insurance covers legal costs and settlements if a staff member or visitor is accused of harming a child, even if the accusation is false.
• Workers' compensation insurance is required in most states if you have employees, and covers medical costs and lost wages if a staff member is injured on the job.
• Your state's child care licensing office sets the minimum coverage amounts and types required, and you must show proof before you receive your license.
• Vehicle insurance that covers passenger liability is required in most states if your school transports children in a van or bus.

General liability insurance for child care centers

General liability insurance covers injuries that happen at your facility. If a child falls off playground equipment, slips on a wet floor, or is injured during an activity, and the parent sues you for medical bills or pain and suffering, this insurance pays for your legal defense and any settlement or judgment up to your policy limit.

Most states require child care centers to carry general liability insurance with a minimum limit — commonly $1 million per occurrence, though some states set it lower or higher. You will need to provide a certificate of insurance to your licensing office showing this coverage is active before you can open.

The cost varies based on your facility size, the ages of children you serve, and your location, but child care centers typically pay between $500 and $2,000 per year for general liability coverage. Insurers may ask about your safety practices, staff training, and whether you have had prior claims.

Abuse and molestation insurance

Abuse and molestation coverage (sometimes called "abuse and molestation liability" or "employee dishonesty coverage") protects you if a staff member, volunteer, or visitor is accused of harming a child. This insurance covers your legal defense costs, settlements, and judgments — even if the accusation is later found to be false.

This coverage is critical because allegations alone can be financially devastating. A single lawsuit can cost tens of thousands of dollars in legal fees before the case is resolved. Many states now require this coverage as a condition of licensing, and most child care insurance policies include it as standard.

If your state does not mandate it, many child care centers still purchase it because the risk is real and the cost is relatively low — often $300 to $800 per year as part of a bundled child care insurance package. Some insurers offer it only if you also carry general liability coverage.

Workers' compensation insurance for staff

If you have employees — teachers, aides, cooks, or custodians — your state almost certainly requires you to carry workers' compensation insurance. This covers medical treatment and a portion of lost wages if an employee is injured or becomes ill because of their job.

Workers' compensation is a state-run or state-regulated program in every state except Texas, which makes it optional. The cost is based on your payroll and the types of jobs your employees do. Child care centers typically pay 1 to 3 percent of total payroll, though the exact rate depends on your state and claims history.

You must carry this insurance before you hire your first employee. In most states, operating without it when required is a criminal offense, and you can be fined thousands of dollars. Your licensing office will ask for proof of coverage during the approval process.

Vehicle and transportation insurance

If your child care school transports children in a vehicle — whether a van, bus, or your personal car — you need commercial auto insurance or a special child care transportation endorsement on your policy. Standard personal auto insurance does not cover transporting children for business purposes.

The policy must include passenger liability coverage, which protects you if a child is injured in the vehicle and the parent sues. Most states require this coverage before you are licensed to transport children, and some set minimum limits of $300,000 to $1 million per occurrence.

If you use your personal vehicle occasionally to transport a child with parental permission, you may be able to add a child care transportation endorsement to your existing policy. If you operate a dedicated school van or bus, you will need a commercial auto policy. Costs vary widely based on the vehicle type, number of children transported, and your driving record.

Property insurance and other coverage

While not always legally required, property insurance protects your building, equipment, and supplies if there is a fire, theft, or weather damage. If you rent your facility, your landlord's insurance covers the building structure but not your contents — you need your own policy for furniture, toys, kitchen equipment, and learning materials.

Some child care centers also carry directors and officers liability insurance, which protects the owner and board members from personal liability if they are sued over business decisions. This is optional in most states but recommended if you operate as a nonprofit or have a board of directors.

You may also want to ask your insurance agent about coverage for field trips, special events, or contracted services like music lessons or speech therapy. These activities sometimes require additional coverage or a waiver from parents.

How to find and purchase child care insurance

Start by contacting your state's child care licensing office and asking for a list of required insurance types and minimum coverage amounts. Write down the specific requirements so you know exactly what to buy.

Next, contact insurance brokers or agents who specialize in child care. Many insurers offer bundled child care packages that combine general liability, abuse and molestation, and property coverage at a lower total cost than buying each separately. You can search online for "child care insurance" plus your state name, or ask other child care centers in your area which insurers they use.

When you get quotes, provide the insurer with details about your facility: the number of children you plan to serve, the ages, whether you will have employees, whether you will transport children, and your facility's safety features. Be honest about any prior claims or incidents, because insurers will find out during underwriting and may deny coverage if you misrepresent your history.

Once you have purchased your policies, request a certificate of insurance for each one. This is a one-page document that proves your coverage is active and lists the policy number, coverage amounts, and the insurer's contact information. You will submit these certificates to your licensing office as part of your process.

Frequently Asked Questions

Do I need insurance before I explore for my child care license?

Most states require you to show proof of insurance as part of the licensing process, but you do not need to purchase it before you submit your process. However, you will need to have it in place before you receive your license and open your doors. It is wise to get quotes and purchase policies early so there are no delays in your licensing approval.

What if I operate a child care center from my home?

Home-based child care centers have the same insurance requirements as larger facilities in most states, though some states set lower minimum coverage amounts for smaller operations. You will still need general liability and abuse and molestation coverage. Your homeowners insurance does not cover business liability, so you must purchase a separate child care policy.

Can I get a discount if I have multiple insurance policies with the same company?

Yes. Many insurers offer bundled discounts if you purchase general liability, abuse and molestation, property, and vehicle coverage from them. Ask each agent about multi-policy discounts when you get a quote. You may also get a discount if you complete staff training in child safety or CPR and first aid.

What happens if I operate without the required insurance?

Operating without required insurance is illegal in every state. You can be fined thousands of dollars, your license can be denied or revoked, and you may face criminal charges. If a child is injured and you have no insurance, you are personally liable for all medical costs and damages, which can bankrupt you.

Does my insurance cover injuries that happen on field trips?

Your general liability policy typically covers field trips, but some insurers require you to notify them in advance or purchase an additional endorsement for off-site activities. Ask your insurance agent specifically about field trips, and get written confirmation of what is and is not covered before you take children anywhere off your premises.