Frequently Asked Questions: Childcare Liability Coverage
Does my Homeowners/Tenants Policy cover my Childcare operation?
No. Although your home/tenants policy includes liability coverage, any business you operate from your home is excluded from coverage. Your childcare operation is therefore not insured. Also, any items in your home used in conjunction with your daycare will have minimal coverage, usually to a maximum of $1000.
DO I need insurance coverage for my daycare?
Yes. Consider the following - Johnny falls off the swing set breaking his arm. Suzie stuffs her teddy bear down the toilet causing it to overflow. Brian, while playing in the backyard, accidentally sets fire to the neighbour's fence. Ashley chases a ball in the park and is hit by a cyclist when she crosses the bicycle path. Without specific coverage for your daycare operation, these claims would in all likelihood, be denied.
What about my Car Insurance?
If you ever use your car to transport the children under your care, whether you take them on outings, to visit a doctor, or to pic, up or drop off your charges, you must notify your insurance broke or Insurer that this is the case. Although there are a variety of ways Insurance companies handle this situation, the most common is to add an endorsement that allows you to carry passengers for compensation. There is a modest additional premium for this coverage.
How much Liability Coverage do I really need?
Most package residential policies include $1,000,000 of liability coverage. Several Insurers will allow you to add on coverage for your home-based childcare busienss to your homeowners/tenants policy, and many will be capable of increasing the limit to $2,000,000. While Canada still enjoys an environment that is less lawsuit concious than the United States, it is important to remember that defense costs are considered part of the claims settlement and will reduce your liability limit accordingly. For your liability policy to pay out in the event of a claim, you must be proven to be negligent. The majority of liability claims require the payment of defense costs proving their policyholder was not negligent. The relative costs for increased liability limits are minimal and a good investment.
Will my Insurer insure my daycare?
Each Insurance company that is prepared to insure childcare operations has a different set of criteria that must be met. Some companies won't even offer the coverage as they consider this home based business to be a commercial exposure and feel it is more properly handled by a Commercial General Liability policy. A few Insurers consider your own children as part of the total number of children under your care at any one time. Others will not insure anyone with a swimming pool. Some only allow a maximum of 3 or 4 children and this may or may not, include your own.
Are any helpers/employees for my Childcare insured by my policy?
No. Other than your spose, anyone that assists you in the course of your day to day operation is not insured by your policy. This would even include a neighbour that you ask to baby-sit while you take a child to the hospital in an emergency situation. Generally speaking, this is not an endorsement that you can add to your policy.
How much can I expect to pay for coverage?
If you meet the specific criteria and are able to extend your liability coverage under your homeowners/tenants policy to your childcare operation, you could pay anywhere from $75.00 to $150.00 anually for $1,000,000. Individual Commercial General Liability (CGL) policies are subject to a minimum premium starting at $500.00 per annum but more commonly set at $1000 per annum.
What has the CCPRN done to help me get coverage?
Several years ago, the Childcare Providers Resource Network of Ottawa-Carleton set up a Master CGL policy through Marsh Private Client Services. The policy provides $3,000,000 of coverage at an annual cost of $189.00 (inclusive of tax -- due to September 11th's incident this price will rise significantly after January 1st. Debbie is presently negotiating on our behalf.) Individual certificates are issued for each childcare provider. This allows pricing to be kept to a minimum and provides each CPRN member that applies for coverage to have a document that can be shown to the parents/guardians of children in their care.
How do I apply?
There is a one page application that needs tobe completed by you. These are available by contacting Debbie Jodoin at Marsh Private Client Services at (613) 786-2019 or 1-888-234-7397. You will also be asked to provide a copy of your current membership card with CCPRN, a blank copy of the contract/registration that would be signed by the parent or guardian, and to forward your payment of $189.00 to cover the annual cost of the coverage. Payment can be split into three cheques over a maximum period of 60 days. All policy documents are issued at Marsh's office so coverage can be effective immediately if you need it to be.
What else should I watch out for?
Even if you have arranged for coverage under a separate CGL policy, you must still notify your home/tenants Insurer that you run a daycare business. One of the largest Insurers in Canada will not insure anyone who runs a daycare from their home. Other companies may require you to reduce your policy to a lesser level of coverage because of the business. Check it out - you do not want to ahve your sewer back-up or kitchen fire claim denied because of a material change in risk - that being a home run business that you did not disclose.
This article has been provided by Debbie Jodoin, a licensed insurance broker with Marsh Private Client Services, #700-350 Albert Street, Ottawa, Ontario, K1R 1A4. Direct Phone Line 613-786-2019l, Fax 613-786-2121 or email at [email protected]. If you have any additional questions specific to your childcare operation, please feel free to contact Debbie directly.