What commercial property insurance covers for a daycare
Commercial property insurance for daycares pays to repair or replace physical property damaged by a covered cause of loss, such as fire, smoke, wind, hail, theft, vandalism, or water from a burst pipe. The exact list of covered causes depends on the policy form. For a childcare business, property usually falls into two groups: the building and everything inside it.
Examples of property losses at a daycare
These hypothetical situations show where property coverage may come into play. How a claim is handled depends on the policy wording and the facts.
- The overnight storm. A storm knocks out power, the walk in freezer fails, and a week of food for meals and snacks spoils.
- The burst pipe. A supply line bursts over a weekend and soaks the infant room, ruining cribs, mats, and the rug.
- The break in. Someone breaks into the office overnight and takes the laptops and check in tablets.
- The fallen tree. High winds drop a tree across the playground fence and crush part of the climbing structure.
Building vs. contents
Building coverage applies to the structure itself and permanently installed fixtures. If you own your center, this is often the largest value on the policy.
Business personal property (often called contents) is everything you use to run your program. For a daycare center, that list adds up quickly:
- Nap and infant equipment. Cribs, cots, mats, high chairs, and changing tables.
- Classroom furniture. Child sized tables and chairs, cubbies, shelving, rugs, and storage.
- Toys and learning materials. Blocks, books, manipulatives, art supplies, and sensory tables.
- Kitchen equipment. Refrigerators, dishwashers, ranges, and food supplies.
- Electronics. Computers, tablets used for check in, printers, cameras, and phone systems.
- Office property. Desks, files, and records storage.
A walk through of each classroom with a rough inventory is one of the best ways to set a realistic contents limit. Many owners underestimate how much it would cost to replace everything at once.
Owned vs. leased locations
If you own your building, you typically insure both the structure and contents. If you lease, the landlord usually insures the building, and you insure your contents. But leases vary, and the details matter:
- Some leases make the tenant responsible for insuring the building or certain parts of it.
- Improvements you paid for, such as classroom build outs, fencing, or a renovated kitchen, may be your responsibility to insure.
- Leases often require specific coverage terms, limits, or that the landlord be named on your policy.
Share your lease with your agent so coverage can be matched to what it asks for.
In-home daycare property
For in-home daycare providers, property used for the business, such as extra cribs, cots, toys, and outdoor play equipment, may be limited or excluded under a homeowners policy. Some providers add business property through an endorsement or a separate policy. Ask your homeowners insurer how business property is treated, and review options with us.
Replacement cost vs. actual cash value
How a policy values your property affects what you receive after a loss.
| Valuation | How it generally works | What it means for a daycare |
|---|---|---|
| Replacement cost | Pays to replace with new property of like kind and quality | Helps you refurnish classrooms with new cribs, cots, and furniture |
| Actual cash value | Pays replacement cost minus depreciation | Older furniture and equipment may be valued well below what new items cost |
Many policies also include a coinsurance condition, so insuring to a realistic value is important.
Playground and outdoor property
Outdoor property is where daycare owners are most often surprised. Playground structures, shade structures, fencing, outdoor storage sheds, signs, and play surfacing may be limited or excluded under a standard property form unless they are specifically scheduled. If your playground is a significant investment, list it and confirm how it is valued.
Equipment breakdown and common exclusions
Equipment breakdown coverage can respond when mechanical or electrical equipment fails suddenly, such as an HVAC system, walk in refrigerator, or electrical panel. It is often added by endorsement.
Standard commercial property policies commonly exclude or limit:
- Flood and surface water
- Earthquake and earth movement
- Wear and tear, mold, and gradual leaks
- Certain outdoor property unless scheduled
Separate flood or earthquake coverage may be available depending on your location. Terms vary by insurer.
Food spoilage and utility interruption
Centers that serve meals keep refrigerators and freezers stocked. Spoilage coverage may help replace food lost when refrigeration fails because of a power outage or mechanical breakdown. Some policies limit spoilage, or cover outages only when the cause is damage at your own premises rather than a problem at the utility. Ask how an off site power failure would be treated.
Property away from your location
Childcare property does not always stay in the building. Portable equipment taken on field trips, supplies stored in a staff member's car, or materials kept at a school where you run a satellite program may have only limited coverage away from your listed address. If you operate in more than one place, make sure each location is listed.
Questions to ask when comparing property quotes
- Is contents coverage written at replacement cost or actual cash value?
- How are playground structures, fencing, sheds, and signs covered, and do they need to be scheduled?
- Is equipment breakdown included, and does it extend to the kitchen and HVAC equipment?
- Is food spoilage covered, and does it apply to off site power outages?
- Are tenant improvements you paid for included in your limit?
- Is there a coinsurance condition, and is the limit realistic for what you would need to replace?
Pairing property with business income
A fire does not only damage cribs and furniture. It can close your doors while repairs happen. Business income insurance helps replace lost income and pay ongoing expenses during a covered closure, and is often written alongside property coverage. Together with general liability, these form the core of many commercial daycare insurance programs.
Next steps
Not sure which coverages your program needs? Our guide on what insurance a daycare needs walks through it by business type. To review property values and options for your location, request a quote.