The Role of Insurance in a Family Childcare Business

1. Am I Required To Carry Liability Insurance ?
2. Does An Affidavit Or Waiver Protect Me ?
3. What are The Different Kinds Of Liability Insurance ?
4. What Does Negligent Superision Mean ?
5. Can I be Sued If I a Not Negligent ?
6. How Does Liability Insurance Protect ?
7. Is There More Than One Type of Insuring Form ?
8. How Much Liability Insurance Should I Buy ?
9. What is A Deductible ?
10. What Should Be Insured ?
11. What Should I look For In a Policy ?
12. What Are Exclusions?
13. Is Childcare Insurance a Business Expense?
14. Can My Homeowner or Renter Insurance Be Cancelled Because I Do Day Care?
15. Can My Landlord Prevent Me From Doing Childcare?
16. What is Workers Compensation Insurance?
17. Do I Need Auto Insurance?
18. Get Help!
    

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    1. State laws vary. Some have mandatory insurance requirements. Check with the
    agency which licenses or registers your facility.
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    2. No! It only means the parent/guardian knows you do not have insurance, and that
    they must collect any money awarded from a lawsuit from you, and you will have to pay
    your own legal fees.
    
    3. Homeowners or Renters insurance policies do not  protect you unless your childcare business is added to the policy for an extra charge. If it is added, coverage is very limited. It does not provide the much needed child abuse coverage. Some companies limit coverage to
    the child abuse premise only.
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    General Liability insurance provides a broader coverage and extends to covers field trips. It can also be extended to include other coverages, including child abuse, at additional cost.
    
    Professional Liability/Errors & Omission insurance is considered by many to be the
    broadest coverage, It provides coverage for negligent supervision for childcare. It is the
    same type of insurance carried by doctors, lawyers, real estate and insurance agents.
    
    
    4. A child's injury or illness could have been avoided with reasonable care.
    
    5 Yes. Lawsuits can be filed against your when the injured child's parents/guardians
    "think" you at fault. even groundless claims have to be defended by an attorney. With
    insurance, if the claim is covered, the insurance company pays the defense cost, If there
    is no insurance, you pay.
    
    6. If you are sued because a child is injured, or...... becomes sick, and the claim is
    covered by the policy, the insurance company will pay your legal defense costs. If your
    are found liable (negligent)
    it will pay the amount specified by the judgment up to the policy limit.
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    Lawsuits are unpleasant as well as expensive, and your need a lawyer to defend you. The best protection is the proper type of insurance, the kind of insurance that is specifically
    designed for family childcare. Unfortunately, not all childcare insurance policies are the
    same, It is important to look for a policy that provides the vest coverage.
    
    7. There are two. An "Occurrence Form" is best because it covers claims reported
    after the policy expires, after your have gone out of business or changed insurance
    companies.
    
    Beware of "Claims-Made" forms. Claims can be made against a provider a number of
    years after the injury; after the child has left the providers care, or after a provider goes
    out of business. In some states a minor can file a lawsuit up to age 21. A "Claims-Made"
    policy only covers claims reported during a specified time, usually during the policy term, or within one or two years after the policy expires.
    
    If your have insurance and a child is hurt while in your care, it is important to report it to
    your insurance company as soon as possible, even if you don't think it's going to be a
    claim.
    
    8. That depends on your individual needs. If insurance is required in your state, they
    will set a minimum limit. Check with the agency which licenses or registers your facility.
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    9. It is the amount you must pay in addition to the policy premium for all claims.
    Many companies have deductibles to reduce their expenses for handling claims, which
    are charged even if nothing is paid on the claim. Deductibles should be avoided because
    they increase the cost of your insurance.
    
    10. Professional Liability/Negligent Supervision and General Liability for your day care operations on and off the premises, including claims or allegations made against you
    because of your actions, or those of your employees, helpers, spouse, children or residents
    of the household.
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    11. Don't be fooled because a company says it is a "childcare policy". There are
    different kinds. It is important to look for one that has the best coverage. Following are
    some of the most important coverage that best protect a family childcare business.
    A.) Defense Coverage: If you are sued, the insurance company will pay for your defense
    even if the suit (claim) is groundless or fraudulent. For maximum defense coverage, look
    for policy whose defense coverage is in addition to the policy limit. If it is included in the
    policy limit, it reduces the amount of your liability coverage.
    
    B.) Child Abuse: Liability for claims made against you , residents of your household,
    or your employees/helpers, whether groundless or not. Coverage should include payment
    of financial awards up to your policy limits. Child Abuse should include sexual, mental,
    and physical abuse.
    
    Beware of policies that include defense cost in the limit. It reduces the
    amount of your insurance.
    
    Look for a policy that includes legal representation/or defense costs for Administrative Hearings resulting from allegation of Child Abuse.
    
    C. Incidental Malpractice: giving medication or following a child's dietary needs.
    
    D. Personal Injury Coverage:
    
    E. Alienation of Affection: protection against claims of "stealing the affection
    and control" of a child from their parent or legal guardian.
    
    F. Contractual Liability: for the provider's obligation under written agreements,
    example: permission to seek medical care in emergencies, to take a child on field trips,
    or to take or pick-up from school.
    
    G. Field trips: ( premise activities protection) away from provider's premises,
    example: trips to the park, museum, theater, or market.
    
    H. Products Liability: includes preparing or serving food.
    
    I. Non-owned Auto Liability: protection from lawsuits resulting from child(ren)
    getting injured in an automobile accident caused by someone using their car on your behalf.
    This coverage is not part of the liability coverage and may be offered as an option.
    
    J. Transportation Coverage: protection from lawsuits resulting form child(ren)
    injured in an automobile operated by you or one of your employees. This coverage is not
    part of the liability coverage and may be offered at an additional cost.
    
    K. Accident Medical Insurance: pays medical bills resulting from an accident,
    even if it is not your fault. Be sure the coverage is without a deductible so you
    do not have to pay part of the bills
    
    Look for a policy that pays at least $20,000 for each child injured as a result of an accident, including while being transported in an automobile, This coverage can be added at a
    very low cost, Some companies may include your own children enrolled in your childcare.
    Some will offer coverage for you or your employees.
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    12. Exclusions are those events that are not covered by the policy. All insurance
    policies have conditions and exclusions. It is important to read your policy.
    
    Beware of policies that exclude coverage for all dogs on the premises, swimming
    pools or other bodies of water, overnight care, HIV/AIDS, or communicable diseases, or
    non emergency care before or after your regular operating hours.
    
    13. Yes. It is tax deductible. consult your tax preparer for specific details.
    
    14. ...You may have protection under state law. For example, in California, if your
    already have a homeowners or renters policy, California Insurance code 676.1 prevents a
    company from canceling or refusing to renew an existing policy just because you
    operate a family childcare business. Check with your state Department of Insurance.
    
    15. Once again, laws vary from state to state. However, sometimes a nervous landlord
    is willing to rent to childcare providers if they are aware that you are a licensed/registered provider
    and willing to add your landlord to your liability policy.
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    16. It pays medical expenses if any employee is hurt on the job. If they are unable to
    work, it would pay disability benefits and rehabilitation expenses and, a death benefit.
    Most state law requires employers to have this type of insurance. An employee is defined
    by the state Labor Code.
    
    17. If you own an automobile, auto liability insurance is required in virtually every state. Childcare Liability policies do not include automobile insurance, and do not cover
    children in your childcare who are injured in an automobile.
    
    18. There are local and statewide family childcare associations representing providers in legislative matters, local regulatory requirements, and they provide education, training, and
    in some cases,...referrals. They also provide a terrific support group and are available to
    answer many questions dealing with your operations. For a local association in your area,
    call (800) 624-0912
    
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    This pamphlet is made available as a Public service by NATIONAL CARE PROVIDERS INSURANCE, INC., A Mutual Benefit Non-Profit Corp. acting as a Group Purchase Plan Under the 1987 Federal Risk Retention Act.

    
    For information regarding any material contained in his pamphlet or for a free insurance
    coverage check list call: (800) 624-0912
    
    

    This pamphlet is intended to provide general information of the topic covered only. It is not intended to provide, nor is it the equivalent of, legal or professional advice. As with any publication, it is necessary to check current laws or regulations to determine if the information is current. This Publication may only be duplicated in its entirety with credit for its content to NATIONAL CARE PROVIDERS INSURANCE, Inc., copyright 2000 16601 Ventura Boulevard, Suite 500, Encino, Ca 91436-4813. (800) 624-0912