Child care center insurance: coverage, requirements and costs

A child care center needs general liability, abuse and molestation coverage written as its own limit, workers' compensation, and a hard look at the auto policy if a van moves children. Licensing rules in a few states also speak directly to insurance. Child care services are NAICS 624410. The exposure is unusual: your customers cannot protect themselves, injuries involve children and are judged by juries with sympathy for the child, and one allegation against one employee can threaten the whole business.

Why child care centers need business insurance

Children get hurt. Falls from playground equipment, finger-pinch injuries, choking and allergic reactions are routine. Most are minor, but a serious injury to a child brings a bodily injury claim whose value is driven by future damages, not just medical bills.

Abuse and molestation is the catastrophic claim. An allegation against one staff member can bring a lawsuit against the center for negligent hiring, supervision and retention. Many general liability policies exclude or sublimit these claims. Coverage is usually written either by endorsement or separately, and it may be claims-made. States have also extended the time children can sue: a 2026 tracker by CHILD USA reports that 19 states have eliminated the civil statute of limitations for child sexual abuse and 30 have revived expired claims, so a claim can arrive decades after the event. That makes occurrence-based coverage, and keeping old policies, important. See abuse and molestation liability coverage.

Transport and field trips. A center van is a commercial auto exposure. Staff using their own cars for pickups make hired and non-owned auto necessary. See commercial auto insurance: what it covers and what it leaves out.

Staff injuries. Lifting toddlers, bending and floor-level work produce strains, and a center employee is protected by workers' compensation.

Core coverages

• General liability. Premises injuries to children and parents, property damage, and medical payments. Many carriers add an abuse exclusion or a sublimit by endorsement, so read the endorsement schedule rather than only the coverage grant. See general liability insurance: what it covers and what it does not.
• Abuse and molestation liability. A separate limit, ideally on an occurrence basis, with defense costs and, where possible, negligent hiring and supervision wording.
• Professional liability. Claims about educational services or care decisions. Some carriers fold this into a day care package.
• Commercial property and business income. Building or leasehold improvements, playground equipment, furniture, kitchen and technology; business income if a fire or water damage closes the center.
• Workers' compensation. Required by state law once you have employees. Texas lets most private employers opt out, and South Dakota has no law requiring it; check workers' comp and benefits requirements by state.
• Commercial auto and HNOA. For centers with vans or staff driving on errands. See Hired and non-owned auto (HNOA) coverage: what it covers and who needs it.
• Employment practices liability. Staff turnover, allegations of discrimination, wage claims; see Employment practices liability insurance (EPLI): what it covers.

Coverage you may be required to carry

Child care is licensed by each state, and a few states write insurance into the licensing rules. Examples we verified:

• Texas. Under the Health and Human Services Commission's Minimum Standards for Child-Care Centers (Chapter 746, revised December 2025), section 746.203 requires a center to maintain liability insurance of $300,000 for each occurrence of negligence covering injury to a child on the premises or in care, with proof sent to Licensing every year by the anniversary of the permit. Section 746.205 allows an exception if the center cannot carry insurance for financial reasons, cannot find an underwriter, or has exhausted a policy's limits, and then requires written notice to Licensing. Section 746.207 requires a center without the insurance to notify the parent of each child in writing before admitting the child, or within 14 days after dropping coverage, and to be able to show the notice was given.
• Minnesota. Minnesota's statute 142B.62 (formerly 245A.152) required a licensed provider to tell parents in writing, before admission, whether it carries liability insurance, to make the certificate available for inspection, to notify parents of changes or lapses, and to give uninsured providers' parents an annual notice on a state form. The Revisor's page now shows the section repealed by 2026 legislation (Chapter 127, Article 13, Section 25), so check with the state's licensing agency for the current rule before relying on it.

Neither state is typical of all 50. Other states set licensing standards for ratios, background checks and training with no insurance requirement, and still others have local or program rules, so use workers' comp and benefits requirements by state and your licensing office. Separately, commercial leases require general liability with the landlord as additional insured, and subsidy and school-district programs often require proof of coverage. See insurance requirements in commercial leases.

Common claims and how to prevent them

• Playground and indoor injuries. Daily inspections of surfacing and equipment, age-appropriate zones and documented supervision.
• Allergic reactions and medication errors. Written allergy plans, locked medication, parent authorization forms and staff training.
• Abuse allegations. Fingerprint and background checks for every employee and volunteer, reference checks, never one adult alone with a child where policy forbids it, visible classrooms, a clear reporting procedure and mandatory-reporter training. Insurers ask for these controls.
• Elopement and pickup errors. Head counts, door alarms, sign-in and sign-out with ID, and an authorized pickup list.
• Vehicle accidents. Driver screening, motor vehicle record checks, headcount checks before locking a van, and seat restraints appropriate to age.
• Staff injuries. Lifting training and adult-height seating and changing stations.

What drives the cost

• General liability and abuse and molestation: licensed capacity or number of children, receipts and hours. Underwriters weigh the ages served (infants versus school-age), the staff turnover rate and hiring procedures.
• Workers' compensation: payroll by class code; the number of staff and their turnover.
• Commercial auto: number of vehicles, drivers, miles and whether a van carries children.
• Property: replacement values and protective systems.
• Underwriters ask about licensing history and violations, background check procedure, ratios, transportation, swimming or water activities, and prior claims. See exposure base.

Specialized coverages to consider

• Higher abuse and molestation limits and occurrence wording.
• Student accident medical to pay small injury bills regardless of fault.
• Umbrella over GL and auto; see commercial umbrella insurance.
• Cyber for enrollment files and health information.
• Home-based providers: a homeowners policy typically excludes a business, and a home daycare often needs a business endorsement or a separate policy.

How to buy

Look for a broker or program that regularly places child care accounts; many standard markets decline or sublimit abuse. Bring your license, capacity, age groups, staff counts and turnover, background check procedures, vehicle list and loss runs. Ask whether abuse and molestation is occurrence-based, what it costs for a higher limit, and whether the aggregate is shared with GL. Keep old policies indefinitely, given the long statutes of limitation.

Key takeaways

• Check your state's licensing rules; Texas requires $300,000 per occurrence or written notice to parents, and Minnesota's parent-notice rule appears to have been repealed in 2026.
• Abuse and molestation coverage should be a separate limit, ideally occurrence-based.
• Background checks, supervision rules and documentation are the controls underwriters want to see.
• Cover vans as commercial auto and staff errands with hired and non-owned auto.
• Keep policies for decades; claims by survivors can come long after.