Many Canadian parents don’t have the advantage of asking a trusted friend or family member to supervise their kids throughout the working week. Turning to a home daycare provider is a solution.
In early 2022, 52% of children under six years old were in licensed or unlicensed child care, according to Statistics Canada. Moreover, a recent StatsCan Labour Force Survey finds a decrease in the number of home-based childcare providers from 34,400 in January 2019 to 20,500 in January 2022. That decrease is attributed to the pandemic’s effect on home daycare providers. StatsCan’s data also shows more unlicensed than licensed centre-based and home-based childcare businesses caring for children aged five and younger.
Home daycares often don’t have licenses, but you may need one, depending on where you live. Besides, the federal government’s $10-a-day daycare program may encourage many unlicensed home child daycare businesses to get licensed to participate in the national plan.
A criminal background check, CPR certification, and a home safety exam are required to receive a license. Most insurance providers will want to see that your home daycare is licensed to meet these standards. Being licensed can make getting home daycare insurance easier and cheaper. Which leads one to ask, “what kind of home daycare insurance coverage should you have?”
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3 Types of Home Daycare Insurance You Must Have
The three primary coverages your home daycare business needs are:
1. Commercial General Liability (CGL) Insurance
Since liability is the highest risk, home-based daycares need general liability insurance. CGL is necessary to cover the costs of third-party bodily injury and property damage claims. It’s frequently called ‘slip-and-fall’ insurance because it covers you if someone is injured on your property.
If a child in your care falls and fractures an arm while playing in the backyard, you may be liable for medical and rehabilitation expenditures. With a CGL policy, you needn’t worry about paying for those expenses out of your pocket. But CGL includes more than that – it protects you from third-party property damage and personal advertising injury (also called reputational harm for allegations of defamation, libel, slander, or false advertising).
2. Commercial Property Insurance
Most homeowners have residential home insurance (or should). But here’s the thing – a private home insurance policy is not designed to cover home-based businesses, including residential childcare businesses. That’s why you need commercial property coverage as part of your policy.
You’re supervising energetic little kids who can be unpredictable. Consider the supplies, furniture, and electronics you have in your home that you also use to run your daycare. They need to be covered in the event of damage or loss. That’s where commercial property insurance comes into play. It protects your home, contents, and furniture from damage or loss related to fire, flood, severe weather, theft, vandalism, and unexpected mishaps – like a random wood block flying out of nowhere and cracking your flat-panel TV screen.
Commercial property insurance may also include business interruption coverage. It provides you with financial support to pay for overhead costs if you’re closed due to an insurable loss while repairs to your property are underway.
3. Professional Liability Insurance
Professional liability insurance is the same as errors and omissions (E&O) insurance. Professional liability coverage matters for private home daycare businesses because it protects you if you’re accused of negligence, misconduct, mistakes, or failing to deliver a service as advertised.
Consider this: if you or one of your staff may make a mistake, or the parents of a child in your care don’t understand your service regulations, it could trigger an argument, complaint, or worse – a lawsuit. Professional liability insurance can help you deal with such a scenario.
What Other Types of Insurance Do Licensed Home Daycare Businesses in Canada Need?
Outside of the three coverage types above, there are other coverages you should consider including in your policy to have customized, comprehensive protection, such as:
- Cyber Liability Insurance. If your home daycare business has a website, uses email to communicate with existing and potential customers, or stores customer data on a server or in the cloud, you should have cyber liability protection to cover costs that arise from a data breach or cyber-attack. Contrary to popular belief, even micro-sized businesses are highly susceptible to cyber-attacks – not just large organizations in hackers’ crosshairs.
- Abuse Liability Insurance. Allegations and lawsuits related to sexual, physical, or mental abuse, harassment and misconduct are always possible for home daycare providers. Adding this type of coverage to your policy can help you deal with such an unfortunate scenario should it arise.
Your existing home insurance policy may include some coverage for a home daycare business. However, gaps in that coverage may expose you to significant risk, or your coverage limit may be inadequate to cover the cost of damages or losses. Check with your insurer to determine what that policy covers and its limits and exclusions.
How Much Does It Cost to Insure a Home Daycare?
Insurance providers weigh several factors when determining the price of a daycare insurance policy. Among those factors are your location, whether your daycare is licensed or unlicensed, years of experience as a home daycare provider, and the type of services you provide.
In general, a policy for a licensed home daycare with general liability and professional liability insurance with a combined $2 million coverage limit may cost approximately $800 per year.
How to Get Home Daycare Insurance Coverage
Insurance is essential for home-based businesses like daycares. The good news is getting your home daycare business protected can be done quickly and easily through Zensurance.
Fill out an online application for a free quote. We’ll source our partner network of over 50 insurance providers to find you the low-cost insurance policy you require.
Our experienced brokers can help you determine how much home daycare insurance you need via phone or live chat.
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