What to do When Children/Parents Damage Your Property?


It can happen at any time:

•    A child breaks one of your toys

•    A child breaks a personal items of yours (chair, eyeglasses)

•    A parent tips over and damages a lamp

•    A child loses her hearing aid

Accidents happen, but sometimes the damage is more than you bargained for.

Should you or the parent pay for the cost of repairing/replacing such items?

There is no single answer to this question.

Clearly, providers should pay for the normal wear and tear of items damaged or destroyed by the children or parents. It’s a cost of doing business.

If you are doing everything you can to keep children safe, you are reducing the risks that an abnormal number of items will be damaged. Put away dangerous and easily breakable personal property. Lock up valuable items.

When you have insurance
When more expensive items are damaged (eyeglasses, furniture) or lost (child’s hearing aid, your gold ring) you should first look to see if your homeowner’s insurance policy will cover the damage or loss. Many homeowner’s insurance policies cover only a small amount of your household property (usually up to $2,000). Talk to your insurance agent and find out what your policy will and won’t cover. You may need to get business property insurance to adequately cover your property.

It’s possible that your business liability insurance policy has some business property coverage. Ask your agent.

You may want to ask the parent if their homeowner’s insurance covers for the damage caused by their child.

When insurance won’t cover it

If you expect parents to pay for excessive damage to your business or personal property, you should create a policy and include it in your parent handbook. Here are some examples:

“Parents will be expected to pay for the damage caused by their child to provider’s property in excess of $100.”

“Parents will be expected to pay for excessive damage caused by their child to provider’s property.”

Some providers are reluctant to ask parents to pay for any damage, regardless of the cost of replacement. They may be afraid of antagonizing the parent. If the parent offers to pay, great!  Having such a policy doesn’t guarantee that the parent will pay for damage.

Can you sue the parent if you ask the parent to pay and she refuses?

It’s not clear whether or not you will win a lawsuit against the parent in small claims court. Clearly, you won’t win if it’s a matter of normal wear and tear. You have a better chance if the child or parent acted negligently.

In other words, if a parent has been drinking and knocks over a lamp, she is negligent. If a child three year old child puts a sandwich in your VCR, she is not negligent. Negligence can be found if the person knew, or should have known, that her actions could cause damage. Proving negligence against a child will be difficult.

Tax Consequences
If a child in your care (or her parent) damages something, you can deduct 100% of the cost to repair it as a business expense.

If a toy or other business item is destroyed and you have already deducted it as a business expense, you can’t claim any additional deductions. If you buy a new toy you can start deducting it using the normal rules of business deductions.

If an item is destroyed that cost more than $500 and has not been fully depreciated,
you can claim any remaining depreciation deductions on it.

For example, let’s say you were depreciating a stroller over seven years and the parents wrecked it when they drove over it with their car (no one was in the stroller at the time!). If you were in the fourth year of depreciation, you could claim the other three years depreciation in the year it was destroyed.

You can never eliminate the risk of property damage or loss, but you can reduce these risks by having the proper insurance and keeping valuable and breakable items away from children (and parents!).

What’s your policy about damaged/destroyed items?

If your property is damaged or destroyed by a natural disaster, see my article, “When Natural Disasters Hit Home.”

Tom Copeland – www.tomcopelandblog.com

Image credit: www.younghouselove.com

Categories: Insurance, Legal & Insurance

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2 replies

  1. My wife is trying to start her own daycare from home and I just need some info on start up.

  2. I’ve written a lot about starting out. See this section of my blog: http://www.tomcopelandblog.com/starting-your-business.html

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