Homeowners Insurance & Family Child Care

THE PROBLEM

“There is a crisis all across the country right now regarding the availability of homeowner’s insurance for those providing child care services in the home.  Insurance companies decline to offer insurance because they believe that they may be responsible to defend or pay claims under the “Personal Liability” portion of the homeowner’s policy.  This has the potential to occur in the event that the insured provider is sued for injuries or damages arising out of their business operations.  Even though there is a specific “day care” exclusion on all homeowners policies, there have been cases where the courts have mandated that the homeowner insurance company respond to child care business related lawsuits.”

Christine Nick, New England Insurance Services, Inc.

HOW MIGHT YOU BE AFFECTED BY THE PROBLEM?

Some family child care providers have had their homeowners insurance cancelled or not renewed, even when they had separate daycare liability insurance.  There is a big difference between cancellation and non-renewal. Either you or your insurance company can decide not to renew the policy when it expires. In Maine, your insurance company must give you a 30 days notice and explain the reason for non-renewal before it drops your policy. 

Cancellation is a different matter.   Insurance companies cannot cancel a policy that has been in force for more than 60 days UNLESS:

• you fail to pay the premium.
• you have committed fraud or made serious misrepresentations on your application, such as not informing the company of a family child care business.

WHO TO CALL

You are entitled to request a hearing within 30 days of receipt of the notice of nonrenewal (or a notice of cancellation).   If you think the reason given for cancellation or non-renewal is unfair or you want a further explanation, call your insurance company’s consumer affairs division or the Maine Bureau of Insurance at 624-8475 or 1-800-300-5000. 

RESOURCES

The Office of Child Care and Head Start does not recommend any specific insurance company but has located some companies that will provide homeowners insurance for home child care providers. The list is not exhaustive and providers are encouraged to call other insurance companies before making a decision. Your RDC and other family child care providers in your area may be able to give you suggestions.  You may also be eligible for insurance through your membership in certain groups, such as teachers associations or veterans groups.  Which company to choose is ultimately the responsibility of each homeowner to decide. 

QUESTIONS TO ASK BEFORE MAKING A DECISION

1. Do you provide homeowners insurance for homes with a family child care business?

2. How many children may I be licensed to have and be eligible for homeowners insurance?

3. How will having a family child care business affect my rates?   

4. What will my homeowners insurance cover?

5. What is my deductible?

6. Do you have an endorsement for family child care business liability?

7. If you offer an endorsement, what does the endorsement cover? What does it exclude?

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Sources:

Insurance Information Institute: http://www.iii.org/individuals/homei/

Maine Bureau of Insurance

New England Insurance Services, Inc

‘Consumer Guide to Day Care Liability Insurance.’  http://www.state.me.us/pfr/ins/daycare.htm