Quick answer
Daycares usually need general liability for injuries to children and visitors, abuse and molestation coverage (often excluded from standard policies), professional liability, and workers' comp for staff. Home daycares also need business coverage because homeowners policies usually exclude it. Insureon's 2026 median for general liability is $45 a month.
Key facts
- Most important policy
- General liability
- Critical add-on
- Abuse & molestation coverage
- Median GL cost
- $45/month (Insureon, 2026)
- Home daycare warning
- Homeowners policies usually exclude business activity
- Who may require coverage
- State licensing agencies, landlords, parents
On this page 13 sections
Coverage a Daycare needs
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General liability Essential
Injuries to children, parents and visitors, and damage to others' property
Young children fall, bump and choke; this is the core daycare risk.
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Abuse and molestation coverage Essential
Defense and damages for allegations of abuse by staff or others
Standard general liability often excludes these claims, and even false allegations are expensive to defend.
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Professional liability (E&O) Recommended
Claims of improper supervision, care or education
Parents may claim that your care or supervision fell short.
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Workers' compensation Essential
Staff injuries such as back strain from lifting children
Required in most states once you hire employees.
-
Commercial auto Recommended
Vehicles used to transport children
Field trips and school pickups create serious auto liability.
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Business owner's policy (BOP) Optional
Liability plus property such as toys, furniture and equipment
Centers with their own space benefit from bundled property coverage.
Estimated cost for a typical Daycare
Estimated premium (typical setup)
$171/month
About $2,052 a year for the policies with a published median · Daycare in the U.S.
| Policy | Priority | Median cost | Why |
|---|---|---|---|
| Business owner's policy (BOP) | Essential | $83/mo | Bundles general liability with property coverage for your space, tools and stock, usually for less than buying both separately. |
| Professional liability (E&O) | Essential | $88/mo | Covers claims that your work, advice or service caused a client harm or financial loss. General liability does not cover this. |
| Workers' compensation | Optional | — | With no employees, most states don't require it. Some clients ask sole proprietors to cover themselves anyway. |
Medians from Insureon's 2026 data (all small businesses). Half of businesses pay less and half pay more. Your quote depends on your location, revenue, payroll, claims history and the limits you choose. "Varies" = no reliable median published.
What insurance does a daycare need?
Caring for young children is rewarding, but it carries real liability. Children fall from climbing equipment, choke on small objects, get sick and occasionally get hurt by other children. Parents trust you completely, and when something goes wrong, they may look to your business to pay.
General liability is the starting point. It covers injuries to children, parents and visitors, plus damage to other people's property. However, many general liability policies exclude abuse and molestation claims. Because daycares are frequently targeted by these allegations, even when they are false, abuse and molestation coverage is one of the most important add-ons a child care business can buy.
Professional liability covers claims that your care, supervision or educational services were negligent. Workers' compensation covers your staff, who often strain backs lifting children. If you transport children for field trips or school pickups, commercial auto coverage is essential.
Home daycare vs. child care center
If you run a home daycare, don't rely on your homeowners policy. Most homeowners policies exclude or strictly limit business activity, especially caring for other people's children for pay. You will likely need a separate in-home daycare liability policy or a business endorsement, if your insurer offers one.
Child care centers usually need a fuller package: general liability, abuse and molestation coverage, professional liability, property coverage for the building or tenant improvements, and workers' comp.
How much does daycare insurance cost?
According to Insureon's 2026 data from 100,000 small-business customers, the median cost of general liability is $45 a month ($538 a year), professional liability is $88 a month, a business owner's policy is $83 a month, and workers' compensation is $54 a month.
Daycare premiums often run differently from the overall median because of the special risks involved. Your cost depends on:
- Number of children enrolled and their ages
- Number of staff
- Whether you transport children
- Pools, playgrounds and other facility features
- Your coverage limits, abuse and molestation limits and claims history
Example claims (illustrative)
Example: A toddler falls from the playground slide and breaks an arm. The parents ask you to pay medical bills. General liability can cover the costs.
Example: A parent accuses a staff member of inappropriate contact. Even if the claim is unfounded, legal defense is expensive. Abuse and molestation coverage can pay for your defense.
Example: A child with a known food allergy is accidentally given a snack containing nuts and needs emergency care. Depending on the policy, general or professional liability may respond.
Example: A teacher hurts her back lifting a child. Workers' comp pays her medical bills and part of her lost wages.
Is insurance required for daycares?
Requirements vary by state and by type of program:
- State child care licensing: some states require licensed providers to carry liability insurance or to tell parents in writing if they don't. Check with your state licensing agency; ChildCare.gov can help you find it.
- Workers' compensation is required in most states once you have employees; see workers' comp requirements by state.
- Landlords and churches that rent space to daycares commonly require liability insurance and additional insured status.
- Auto liability is required for any vehicle on public roads.
Choosing the right limits
General liability limits of $1 million per occurrence and $2 million aggregate are the most common small-business limits according to Insureon's 2026 data, and many landlords and licensing programs expect at least that. Pay attention to the abuse and molestation limit, which is often lower than your main liability limit and may have its own aggregate.
If you transport children, choose auto liability limits well above your state's minimum. A single serious accident involving several children can exceed low limits quickly.
Common gaps to watch
- Abuse and molestation exclusions in standard general liability.
- Home daycare exclusions in homeowners policies.
- Volunteers and family members helping in your program may not be covered the same way as employees.
- Pools and trampolines may be excluded or require special approval.
- Medication errors may fall under professional liability rather than general liability.
How to lower your premium
- Run background checks on all staff and volunteers and keep the records.
- Keep ratios and supervision logs in line with your state's licensing rules.
- Inspect playgrounds and equipment regularly and fix hazards fast.
- Document incidents and allergy plans for every child.
- Avoid transporting children if you don't need to, or use well-maintained vehicles and trained drivers.
Related: home care agency insurance, nonprofit insurance and the business insurance cost calculator.
How to get Daycare Insurance
- Check your licensing rules
Contact your state child care licensing agency to learn whether insurance is required and at what limits.
- Tell your home insurer
If you run a home daycare, ask whether your homeowners policy covers it; most don't.
- Choose core coverage
Get general liability with abuse and molestation coverage, plus workers' comp if you have staff.
- Add transport coverage
If you drive children, get commercial auto coverage that fits how you transport them.
- Compare and document
Compare quotes, then share your certificate of insurance with your licensing agency and landlord if required.
Frequently asked questions
What insurance does a daycare need?
Most daycares need general liability, abuse and molestation coverage, professional liability and workers' compensation for staff. If you transport children, add commercial auto. Home daycares also need business coverage, since homeowners policies usually exclude it.
How much does daycare liability insurance cost?
According to Insureon's 2026 data, the median cost of general liability for small businesses is $45 a month. Daycare premiums depend on enrollment, staff, transportation, facility features and limits, so get quotes based on your specific program.
Does homeowners insurance cover a home daycare?
Usually not. Most homeowners policies exclude or strictly limit business activities such as caring for other people's children for pay. Ask your insurer about an in-home daycare policy or business endorsement.
What is abuse and molestation coverage?
It's coverage for defense costs and damages when someone alleges abuse by an employee, volunteer or other person at your daycare. Standard general liability often excludes these claims, so child care providers usually add it separately.
Is liability insurance required for licensed daycares?
It depends on your state. Some states require licensed child care providers to carry liability insurance or disclose to parents if they don't. Check with your state's child care licensing agency for current rules.
Do daycares need workers' compensation?
In most states, yes, once you have employees. The employee threshold varies by state. Workers' comp pays medical costs and lost wages for staff injured on the job.
Does daycare insurance cover field trips?
General liability may cover injuries during supervised outings, but driving children requires auto coverage. If you transport children in your own or business vehicles, you need commercial auto coverage that fits that use.
Sources
- Insureon — Small business insurance costs (2026)
- ChildCare.gov — Find child care licensing information
- U.S. Small Business Administration — Get business insurance
We cite official agencies and published industry data. See our editorial policy. Found an error? Tell us.
This guide is general information, not insurance, legal or financial advice. Coverage, exclusions and prices vary by insurer and state. Always read the policy and ask a licensed agent before you buy.