Does Your Childcare Centre Have Business Liability Insurance?
If you operate a childcare centre, having enough business liability insurance is needed to protect the children in your care and your daycare business.
A lawsuit against your childcare centre can damage its reputation and be financially draining. Business liability insurance financially protects daycares against lawsuits. Does your childcare centre have enough liability insurance?
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Why do daycares need business liability insurance?
Your daycare needs liability insurance to protect against financial losses due to lawsuits or claims related to accidents, injuries, or negligence involving children or staff. Liability insurance covers legal fees, settlements, and medical expenses if a child is injured at your daycare or if a parent claims your daycare centre was negligent in caring for their child.
Did you know? Western Financial Group has decades of experience protecting Canadian childcare centres. Western’s exclusive Childcare Centre Insurance Program can be customized for licensed commercial and home-based daycares, pre-schools, before-and-after school care, and private schools.
What are the top business liability insurance coverages needed for childcare centres?
Commercial general liability (CGL) insurance
CGL insurance can cover your childcare centre for lawsuits alleging personal injury to a child or anyone visiting your childcare, false advertising, and libel or slander.
- Commercial general liability insurance typically covers medical fees, legal expenses, and settlements regardless of the outcome of a lawsuit by a customer against you.
- Your CGL insurance policy should protect you from libel, slander, copyright infringement, and false advertising allegations.
Without commercial general liability insurance, you would be responsible for paying any liability costs out of your own pocket. Can you afford that?
Abuse liability insurance
Your daycare could face allegations of physical, sexual, and emotional abuse. Abuse liability insurance helps your daycare defend itself against these allegations.
Abuse can be defined as any act or threat involving molestation, harassment, corporal punishment, or any other form of physical, sexual, or mental abuse.
Abuse liability coverage and general liability coverage are key features of Western’s insurance coverage for childcare centres.
Professional liability insurance
This type of insurance is also known as errors and omissions (E&O) insurance. It protects your daycare employees. Employees can make mistakes at any given time, or parents may misunderstand the terms of your daycare services. For example, a parent can decide to sue for financial loss, misconduct, negligence, or failure to deliver services as advertised at your daycare.
Cyber insurance
If you store data on the children at your daycare such as medical information, you musts protect this information and can be held liable if you don’t. Do you take online payments for services?
If your computer system is hacked, cybercriminals can sell the information. Without cyber insurance, you will have to pay out of your pocket for the cost of restoring your system. You may also be liable for damages to third parties whose information has been stolen and you may have to pay for notification expenses to inform parents affected by a breach.
Directors and officers insurance
If your childcare centre has a board of directors, you will need directors and officers liability insurance to protect your board from claims of negligence. Individuals serving on your board of directors can be sued for the actions of your daycare centre.
What other insurance do daycares need?
Commercial property insurance
Commercial property insurance covers the furniture, equipment, and supplies that your daycare uses in its day-to-day operations if they are lost or damaged due to an insured event, such as a fire, theft, flood, or vandalism.
To protect your daycare in the event of a sewer backup or flooding, you should consider adding sewer backup or overland flood coverage extensions, which standard business insurance policies typically do not cover.
You can also consider adding earthquake insurance, depending on where your daycare is located.
Business interruption insurance
Business interruption insurance supports you when your daycare can’t operate due to a covered loss, such as repairs. This type of insurance can mean the difference between recovering from a loss and closing your daycare permanently. It’s usually added to a commercial property insurance policy as an endorsement or rider.
Some examples include:
- Damage from fire or vandalism
- Damage to a neighboring business
Business interruption insurance can help with expenses such as:
- Payroll
- Rent
- Utilities
- Property taxes
- Alarm monitoring
- Relocation of your childcare centre
Equipment breakdown insurance
This type of insurance provides coverage for property damage from the sudden and accidental breakdown of insured equipment not automatically covered by a standard commercial property policy. You’ll need to have a list of the equipment, such as your furnace or freezer, at your daycare and how much they are worth.
How much daycare insurance do I need and how much does it cost?
It will depend on the size of your daycare, licensing, services provided, training and experience, number of employees, and claims history. The cornerstone of your childcare centre insurance program is having enough business liability insurance to protect it financially from lawsuits and claims.
It’s unlikely that all commercial or home daycare businesses would pay the same monthly or annually for their childcare centre insurance coverage due to their size and services provided.
Final thoughts
In order to protect the children at your daycare centre and the centre itself, you need business liability insurance. Lawsuits are usually expensive and can potentially force your daycare to close. Liability insurance helps cover legal costs and settlements, giving your daycare financial protection when it’s needed most.
FAQs
What questions should I ask about a childcare centre?
You can ask: How long have they been in business, what are their educational qualifications, and if the centre and workers are insured. You can also ask how they would deal with a discipline problem, their policy for sick children, how they deal with children with allergies, and if they provide meals and snacks.
Should daycares have insurance?
Daycares should have insurance. There are risks that come with looking after young children, such as injuries, potential abuse, and property damage.
How many children can a home daycare look after?
A home daycare can usually be licensed for up to six children, including the provider's own child/children.
How many kids are in daycare in Canada?
A report by Statistics Canada highlights findings from the Canadian Survey on the Provision of Child Care Services, 2024. This 2024 report indicated that almost 47,000 operators provided childcare services to 1.1 million Canadian children under the age of 12.
Can babies go to daycare in Canada?
Many daycare centres in Canada accept babies as young as six weeks old, but the exact age limit can vary depending on the daycare and its policies.
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