Three Key Legal and Insurance Tips


Family child care providers can never eliminate the many risks associated with caring for children.

Here are three tips you can take to reduce the risks of running their business.

One: Take common sense steps to manage your risk

* Comply with all state licensing regulations. If you are in compliance with state regulations, particularly those dealing with health and safety issues, you are likely to be less liable if there is an accident.

* Carefully screen, train, and monitor employees. Because you could be held liable for actions of your employees, be sure they are able to protect the health and safety of the children in care.

* Fulfill your responsibilities as a mandated reporter of child abuse and neglect. You need to understand your responsibilities as a mandated reporter and be a resource to parents about child abuse and neglect

Two: Establish clear policies to keep children safe

* Protect children from parents who pick up or drop off their children under the influence of alcohol or drugs, or fail to provide adequate car restraints. Adopt a policy that urges parents to use other transportation options in these situations. If parents insist on transporting children when the child is in danger, don’t hesitate to call the police. See my article “What to Do When A Parent Shows Up Drunk” and a sample transportation policy.

* You cannot discriminate against families because of race, color, sex, religion, disability, or national origin. Disability includes physical handicaps, learning disabilities, HIV, and AIDS. You are responsible for complying with the Americans with Disabilities Act.

* Follow the proper sleeping procedures with infants by putting them on their backs to prevent SIDS.

Three: Obtain adequate insurance to protect against major risks

* Homeowner’s insurance: Many homeowners’ insurance policies exclude coverage or severely limit the coverage for a family child care provider. Obtain a written statement from your insurance agent that your home and contents are fully covered for business use. See “Are You Underinsured? Probably Yes”.

* Car insurance: If you use your car on a regular basis for your business may need to purchase commercial car insurance. Discuss your use of your car with your agent to ensure that you are properly covered. See “Does Your Car Insurance Really Cover You When Transporting Children?.

* Business liability insurance: Purchase a business liability insurance policy that covers you against lawsuits and claims against your business. Purchase as much as you can afford: ideally coverage should be $1 million per occurrence and $2-3 million aggregate. See “Do You Have Business Liability Insurance to Protect Your Business?”

A modified version of this article was first produced by Think Small. For additional family child care business publications, contact Think Small’s publishing division, Redleaf Press, at 800-423-8309 or visit

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Legal & InsuranceFor more information, see my book Family Child Care Legal and Insurance Guide.

Categories: Insurance, Legal & Insurance

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3 replies

  1. Can you get insurance for your daycare if you are unlicensed? I live in VA if that helps.

  2. The answer depends on your state, and I don’t know whether you can or not in Virginia. In general, insurance companies won’t offer liability insurance unless you are licensed.

  3. Thanks for keeping the overview so simple, this helps in understanding if there is a need for insurance since there are lots of people especially here in our state who seems to consider it unimportant. Thanks

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