Starting a Daycare: Insurance Checklist Before You Open

When you are starting a daycare, insurance can feel like something to deal with right before the doors open. In practice, it shows up much earlier. Your lease, your license application, your first hire, and your first vehicle can each raise an insurance question, and some of them need answers before you can move forward.

This checklist is organized by timeline, so you can tackle each item when it actually matters. Not every step applies to every program, and requirements vary by state and provider type. Treat it as a planning tool and confirm specifics with your licensing agency, landlord, and agent.

Before you sign a lease

A commercial lease is often the first document that tells you what insurance you need to carry. It is much easier to negotiate before you sign than after.

• Find the insurance section of the lease and read it closely
• Note any required coverage types, limits, and deductibles
• Look for additional insured wording, which asks you to add the landlord to your liability policy
• Check who is responsible for insuring the building versus your contents and improvements
• Ask whether the landlord expects a certificate of insurance before you get the keys
• Send the insurance section to your agent before signing, so you know whether the terms are something insurers may be able to meet

If you plan to remodel classrooms, add bathrooms, or build out a playground, mention it. Improvements you pay for may need to be insured under your own property coverage.

Before you apply for or finalize your license

Licensing agencies may ask for proof of insurance as part of the process, but what they want differs by state and type of program. Do not assume. Ask your licensing contact directly:

• Does the agency want proof of insurance, and at what point in the process?
• Which coverages, if any, does it want to see?
• Should the certificate list the agency in a specific way?
• Does it need notice if a policy changes or cancels?

Our guide to where childcare insurance requirements come from covers licensing alongside leases, contracts, and lenders, with questions to ask each one.

Before you hire your first employee

Hiring changes your insurance picture. Many states have rules about workers compensation for employees, and those rules vary, so check with your state’s workers compensation agency or ask your agent about your state before anyone starts work.

• Ask your state, or your agent, how workers compensation applies to your business
• Have a payroll estimate ready, since it often affects how workers comp is rated
• Decide how you will handle background checks and document them
• Think about employment practices liability if you plan to hire several people

Lifting toddlers, kneeling at the changing table, and illness exposure are part of the job. Our article on workers compensation for daycare employees goes deeper.

Before you buy or lease a van

Vehicles used for business, especially ones that carry children, are generally not something a personal auto policy is designed for. Talk to your agent before you buy, not after.

• Share the year, make, model, and seating capacity of any vehicle you are considering
• List who will drive and gather their license information for your agent
• Decide whether staff will ever drive their own cars for program errands or field trips
• Ask how commercial auto coverage would apply to your planned use

Some insurers are selective about transportation, so it helps to know your options before you commit to a vehicle. For more, see our article on insurance for transporting daycare children.

Before opening day

This is where everything comes together. Make sure your policies are bound, not just quoted, before the first child arrives.

• General liability, abuse and molestation, and professional liability are in force
• Property and business income are in place if you have a facility and equipment
• Workers compensation is in place if you have employees and it applies to you
• Commercial auto is in place for any program vehicle
• Certificates of insurance have gone to your landlord, licensing agency, and any partners that asked
• You have considered accident medical coverage, which may help families with medical bills after a minor injury regardless of fault
• If you use a parent portal, online payments, or digital records, you have asked about cyber coverage for family and staff data
• Policy documents are saved where you and your director can find them

If you are unsure which coverages fit your program, our step by step guide on how to get insurance for a daycare walks through the full process.

Your first 90 days

Opening is not the finish line. The habits you set in the first few months may shape your claims experience for years.

• Use a consistent incident report form and complete it the same day, every time
• Train all staff, including substitutes, on incident reporting and parent communication
• Keep sign in and sign out records, supervision zones, and drills documented
• Compare actual enrollment, payroll, and staff count against what you told your insurer
• Tell your agent about meaningful changes, such as a new age group, extended hours, or a second vehicle

Estimates on a new program’s application are normal. Updating them as real numbers come in helps keep your coverage accurate.

Notes for childcare centers

Centers usually carry the widest set of coverages because they have a facility, employees, and often vehicles. A few extra points:

• Review the lease with your agent before signing, not after
• Inventory furniture, kitchen equipment, playground equipment, and electronics so property values are realistic
• Ask about business income coverage, which may help if a covered loss forces a temporary closure
• Consider umbrella coverage if your lease or contracts call for higher liability limits

Our page on insurance for commercial daycare centers has more detail.

Notes for in-home daycare providers

Starting an in-home daycare raises one conversation centers do not have: your homeowners or renters policy.

• Call your homeowners insurer and ask, in writing if possible, how the policy treats a home daycare
• Ask whether business activity, business property, or injuries to enrolled children are excluded or limited
• Understand that a homeowners policy is generally built for personal use, so business coverage is often handled separately
• Check whether your licensing agency wants proof of insurance for home providers

Our guide on whether homeowners insurance covers a daycare explains what to ask, and our in-home daycare insurance page covers business options for home providers. Options vary by insurer and state.

Once your plans are taking shape, you can start a quote for your new program or call 605-275-9700 to walk through this checklist with a specialist.

This article is general information, not legal, regulatory, or safety advice, and it does not change the terms of any policy. Requirements vary by state and provider type.