Owners often ask us, "What insurance is a daycare required to have?" The honest answer is that daycare insurance requirements depend on who is asking. Your state licensing agency, your landlord, a school district you contract with, and the bank that financed your building may each have their own expectations. This guide explains where those requirements come from and how to confirm the ones that apply to your program.
The main sources of daycare insurance requirements
Think of your requirements as a stack of documents. Each one may ask for something different, and your insurance program needs to satisfy all of them at the same time.
State childcare licensing rules
Each state licenses childcare in its own way. Some states address liability insurance in their licensing regulations, some require providers to tell parents whether they carry insurance, and some say little about insurance at all. Rules also often differ by provider type: a licensed child care center, a family or group childcare home, a school age program, and a license exempt provider may each be treated differently. Your state childcare licensing agency is the authority on what applies to you.
State workers compensation laws
Workers compensation is governed by state law, and each state decides which employers must carry it. Factors like the number of employees, the type of business, and whether family members work for you can matter. If you have staff, or plan to hire an assistant for the toddler room, check your state's workers compensation rules. Our workers compensation guide explains how the coverage works.
State auto insurance laws
States set their own auto insurance rules for vehicles on the road. If your program owns a van for field trips or school pickups, or if staff drive children in their own cars, the vehicle side of your operation has its own insurance obligations. Personal auto policies may not respond to business use, which is why many programs look at commercial auto insurance.
Leases and landlords
For many daycare centers, the lease is the most detailed insurance document they will ever sign. Leases often ask the tenant to carry general liability at stated limits, name the landlord as an additional insured, provide a waiver of subrogation, and insure their own improvements and contents with property coverage. Some leases also ask for business income coverage or set rules about how quickly you must notify the landlord of a cancellation.
Contracts with schools, districts, and facility owners
Before and after school programs, summer camps run in a school gym, and preschools that rent space from a church or community building usually sign a facility use agreement or service contract. These agreements commonly ask for a certificate of insurance and for the facility owner to be listed as an additional insured. Some include indemnification language that works hand in hand with your insurance.
Lenders and SBA style loans
If you financed a building, a renovation, or equipment, the lender may ask you to insure the property it has a stake in and to list it as a mortgagee or loss payee. SBA style and other small business loans often include insurance conditions in the loan documents, so read them alongside your policy.
Subsidy, food program, and other participation agreements
Programs that accept childcare subsidies, take part in a child and adult food program, or work with a local agency sign participation agreements. Some of these agreements may include insurance provisions or ask for proof of coverage. Read each agreement, and ask the sponsoring agency if anything is unclear.
Franchise agreements
Franchised childcare brands typically set insurance standards for their locations in the franchise agreement or operations manual. These can include specific coverages, limits, and additional insured wording for the franchisor.
Parent enrollment agreements
Your enrollment agreement is not an insurance policy, and it does not replace one. But it is related. Policies on pickup authorization, medication, field trip permission, and incident reporting shape how claims unfold, and some providers describe their insurance in parent handbooks. Make sure what you tell families matches what your policy actually covers.
How to find and confirm your actual requirements
You do not need to memorize any of this. You need a short list of documents and a habit of checking them. Here is a simple process that works for centers and in-home providers alike.
- Contact your state childcare licensing agency. Ask whether insurance, or notifying parents about insurance, applies to your license type. Ask where the current rule is published.
- Read the insurance section of your lease. Note required coverages, limits, additional insured wording, waiver of subrogation, and notice requirements.
- Collect your contracts. Gather facility use agreements, school district contracts, franchise documents, loan documents, and program participation agreements in one folder.
- Make a requirements list. Write down each requirement and who it comes from. This becomes the checklist your agent works from.
- Ask your insurer or agent to confirm in writing. Send the list and the documents, and ask for written confirmation of which requirements your policies meet and which they do not.
- Keep certificates current. Track who has a certificate of insurance on file and send updated certificates when your policy renews.
- Recheck at renewal. Leases get amended, rules change, and programs grow. Review the list every year before your policies renew.
State specific information
We are building state pages for the states we serve. Each one will point to the state's official childcare licensing source rather than summarizing rules from memory, so you can check the current requirements directly.
Glossary: terms you will see in insurance requirements
Leases and contracts use a handful of insurance terms again and again. These are general definitions; how a term applies depends on the exact wording of your documents and your policy.
- Additional insured
- A person or organization, such as a landlord or school district, added to your liability policy so it can receive certain protection for claims arising from your operations.
- Certificate of insurance
- A summary document showing the policies you carry, the policy dates, and the limits. It is evidence of coverage and does not change the policy.
- Waiver of subrogation
- An agreement that your insurer will not seek to recover what it paid on a claim from a specific party, such as your landlord. It usually needs to be added to the policy by endorsement.
- Per occurrence and aggregate limits
- The per occurrence limit is the most a policy will pay for a single covered incident. The aggregate limit is the most it will pay for all covered incidents during the policy period.
- Primary and noncontributory
- Wording that asks your policy to respond first for the additional insured, without first requiring the additional insured's own insurance to share in the loss.
Requirements are the floor, not the plan
Meeting a requirement shows that you met someone else's minimum. It does not mean your program is well protected. A lease may only ask for general liability, but your program may also face abuse allegations, employee injuries, vehicle accidents, and a closure after a fire. Our guide on what insurance a daycare needs covers the full picture, and our coverage pages explain general liability, abuse and molestation coverage, and commercial property insurance in more depth.
Get help matching your coverage to your requirements
Send us your lease, contracts, and any licensing guidance you have, and we will help you compare them against your current coverage. Curious about pricing first? Read our guide to daycare insurance cost, or request a quote to review coverage options for your operation.