So you love kids so much that you’ve decided to start your own day care, eh? That’s great, we’re excited for you. Of course, it’s not all finger paints and “Duck, Duck, Goose.” There’s a lot of planning and arrangements that go into running a day care. And that’s why we’ve put together this little crash course for you.
But as helpful as each of these steps are to starting up your day care, the most important thing is to have the right business insurance coverage. Because whatever your intentions, the unexpected can happen at any time. And that’s what our independent insurance agents are here for — to help you find the perfect coverage at the best possible price.
All about the Day Care Industry
Industry revenue of child day care services in the US (in billion US dollars)
The day care industry is currently experiencing a steady rise. A lot of people these days are choosing to stay at home and care for their own children while adding on a few others for additional income.
At the start of the decade, the industry’s revenue was just over $30 billion. And for 2019, it’s expected to grow to $45 billion, with $50 billion in total revenue projected by 2023. With the demand continuing to grow, now might just be the perfect time for you to set your day care plans into motion.
Projected number of day care operators in the US
Along with the industry’s revenue, the number of day care businesses in the US is also increasing. In 2017, there were 816,343 active day care operators, and by 2021, it’s projected to jump to 856,238 — an increase of nearly 40,000. Now that’s a lot of alphabet blocks and nap times.
Top ten largest for-profit child care organizations in the United States, by number of child care centers
How to Start a Day Care
Your can-do attitude is always a great motivator, but it’s far from all you need to bring your day care dreams to reality. Of course your vision will be specific and unique (as it should be), but we’ll take a look at some general steps to starting a day care:
- Step One: Planning. No successful business can begin without a solid game plan—we’re willing to bet on that. First up, you’ll need to determine all kinds of stuff like your start-up costs, target market, business name, the full set of services you’ll offer, and how long it’ll take you to turn a profit. You’ll also need to decide if you want to work out of your own home or another building, what age group you want to cater to, etc. Last, if applicable, you’ll need to scout out a location and actually purchase or rent said property, once you’ve found it.
- Step Two: Legal stuff. Next, you’ll decide what kind of business entity you want to be (e.g., LLC, partnership, etc.), and then go through the proper channels for making it legal by registering with your state. You’ll also need to register for taxes and obtain any required permits and licenses.
- Step Three: Money stuff. This phase involves opening a business bank account so you can accurately monitor your business’s financial performance, and it will also make your life a heck of a lot easier when it comes time to file your annual taxes. Then, it’s time to obtain your start-up costs and determine how much you’ll be charging families.
- Step Four: Define and build your brand. What will your business stand for? How do you want the local parenting scene to perceive it? These are just a couple of questions you’ll answer in order to define your brand. A solid, unique branding of your business will help it stand out from the competition. Once the nitty-gritty has been figured out, it’s time to get to work building that brand. This generally involves designing business cards, building a website, and establishing a social media presence. If you’re clueless when it comes to Facebook or any of the other platforms, you can always hire someone (or beg your nephew) to take care of it for you.
- Step Five: Build your team. You’ve made all kinds of progress, and now it’s time to decide if you’re doing this alone or you need a team to help you do all the work. You’ll need to determine the different roles you need to fill and then go about hiring your staff. You can advertise online, in your local newspaper, or go old-school with a few word-of-mouth tactics. Once you’ve got a solid team established, it’s time to get them trained.
- Step Six: Iron out the details. For your day care business, this could involve purchasing necessary supplies, organizing your toy shelves, designing eye-catching signage, crafting your schedule, establishing your emergency plan procedures, etc. Basically, any of the specifics needed to make your day care come to life will fall into this step.
- Step Seven: Get coverage. The final step, and the most important in our opinion, is to nail down the proper coverage. You’ll need business insurance to protect not only your day care, but also your employees—and yourself. Business insurance is the pièce de résistance that’ll keep your day care teaching, protecting, and entertaining these precious little whippersnappers for years to come.
What Is Day Care Insurance?
Super simply, day care insurance is a nutritious snack of an insurance package designed to meet the business protection needs specific to day care owners. This includes all the coverage offered with a basic small business insurance plan in addition to coverages tailored to the unique needs of day cares.
What Does Day Care Insurance Cover?
A day care insurance policy is typically the easiest option when it comes to knocking out your extensive list of coverage needs all together in one tidy package. These policies offer the basics of business insurance coverage, including most of the liability insurance you’ll need, plus specific coverages tailored to your unique niche.
Here are several day care insurance coverage options:
- General liability: This coverage protects you against property damage or injury claims made by a third party.
- Workers' compensation: If your employees become ill, get injured, or worse due to a work-related incident, this aspect of the insurance covers the financial ramifications. Depending on the type of work being performed, this coverage is often mandatory in most states.
- Property insurance: Covers loss of or damage to your physical property, including your office space, and often the inventory in it. Protected mishaps include fires, storms, and more.
- Cyber risk & privacy liability: Covers the loss/theft of customers’ sensitive data, including credit card numbers and more. This coverage can also save your business in the event a deposit or money transfer is intercepted by cybercriminals.
- Employment practices liability: Covers fees for lawyers and other financial ramifications if any of your employees are involved in harassment cases against coworkers or customers. When children are concerned, this coverage extends to negligence towards minors.
- Business income: A part of property insurance, this aspect covers the financial loss suffered while a business is closed due to fire damage or other disasters.
Your day care insurance package will be assembled by selecting the coverages that work for your unique business from a big list of available options. Coverage applies to everything from lost business revenue to potential legal/court fees and beyond.
Who Needs Day Care Insurance?
Whatever the size or stuffed animal quota of your day care, if you’re caring for the public’s children and paying employees, you’ll need protection. Operating a day care comes with a set of unique risks, both obvious and hidden, so coverage is essential if you own/operate/offer any of the following:
- Child care center
- Family day care
- Pre/post school hour day care
- In-home day care
- Nanny services
Day care insurance will cover all aspects of your business, regardless of the specific type you own. It’s always important to have protection for your workers, your equipment, your inventory and your property, but protection against potential lawsuits is also crucial. Day cares of all shapes and sizes can be sued, so don’t risk not having coverage.
How Much Does Day Care Insurance Cost?
Truthfully, it depends. On quite a few things. A huge commercial day care center in a large city might pay $2,000 annually in combined liability insurance, workers' comp, and more. However, an in-home day care service in a small town with a few, if any, additional employees might pay only $600 annually.
Of course, it’s hard to offer an average figure, since each day care is unique. But really it depends on a number of factors, like:
- The type of day care: This involves more than just the songs you sing. The condition of the building you house your day care in, as well as the services you offer and any equipment you use, will affect your business’s risk level. Obviously, more danger means more money for insurance.
- The location of the day care: Larger cities tend to have higher costs for insurance, but it goes beyond that. Depending on where you are in the country, your location may be subject to various weather-related risks. Day care centers along the Atlantic Coast, for example, may have premiums up to 20% higher due to risk of hurricane damage.
- The number of employees: The more you've got, the more workers' comp you’ll need. Simple as that.
- How much business you generate: Premiums are calculated based on business projections for the upcoming year. If your workload doubles, so will your premium, most likely.
Top 5 Business Insurance Claims
From potential injuries to property damage and lawsuits, business insurance is definitely a must-have. In order to keep all operations running smoothly, you’ll need to consider not only the risks unique to your trade, but also those that apply to all kinds of businesses. Here’s a quick look at the most common business insurance claims across the board:
- Theft/Burglary: Whether they’re after money, merchandise, your company vehicles or anything else, thieves and burglars commonly target businesses. Anything you have that could be stolen is worth protecting.
- Weather-related damage: Windstorms and hailstorms create the type of weather damage most often reported by businesses across the map. Whether it’s shattered windows, broken signage, destroyed products, or anything else, Mother Nature can wreak havoc when she gets angry. Plan for disasters before they happen, and secure coverage up front.
- Fire damage: Another common/costly claim is fire damage. Be it destruction caused by natural wildfires or resulting from employee negligence (such as with a kitchen fire), these disasters can be devastating. Fire damage can result in lost property, inventory, and even revenue if your business is forced to close. Also, fires are obviously a huge hazard for your workers and customers alike. Take as many proactive measures as possible, such as installing sprinkler systems and extinguishers.
- Employee injury: Even the most well-trained employees on record run the risk of being injured on the job, regardless of the line of work they’re in. Employees may get injured while carrying out daily tasks, due to the negligence of a coworker, while making service deliveries, or in a number of other ways. Protecting your workers with workers' comp is crucial, not to mention mandatory in most states.
- Customer injury: Of course, your business’s customers are also at risk of injury while on your property. Slips and falls are some of the most commonly reported business insurance claims, but customers can also be injured due to unsafely stocked shelves, employee negligence, faulty products, and much more.
Top 5 Business Insurance Discounts
Owners of businesses of all types love scoring discounts however they can. And fortunately, there are some discounts out there to help obtain a significantly lower premium, like:
- The safety discount: Insurance companies love working with clients who put safety first. Put practices in place to keep your employees, equipment, and physical space as safe as possible, and you're likely to be rewarded by your insurance company. Installing sprinkler systems and burglar alarms are just a couple of examples of easy ways to score this discount.
- The quality discount: Establishing a track record of quality services and customer interactions will not only keep your business running strong, but also help reduce your insurance costs. Essentially, keeping your clients happy is the key to keeping your insurance company happy, and they just might slash your premium as a thank-you in return.
- The low claims history discount: Along the same lines as maintaining a safe and efficient business, having a low claims record is another way to seriously please your insurance company—and over time they may reward you for it. Plus, if you ever need to switch insurance policies or companies, having a low or even squeaky-clean claims record will definitely help you land a lower premium.
- The professionalism discount: Sometimes insurance companies send out inspectors to observe your business during a typical day of operation. If your equipment is clean and well-maintained, your employees are following necessary safety protocols, and your customers/clients seem happy, you’ll get a good report. A favorable evaluation could reward you with a reduced premium.
- The bundle discount: Purchasing multiple types of insurance with the same company is a tried and true way to save money, but so is purchasing specialty insurance packages. These packages, made up of multiple policies tailored to a specific kind of business, are designed to save you money—and just generally make life easier. And since they exist, you might as well take advantage.
How to Find the Best Day Care Insurance
In order to get the protection you need (and deserve), you’ll want to work with a trusted expert. Independent insurance agents will not only know where to find the best coverage and price, but also help to make sense of the fine print.
Consider your business’s unique needs, then connect with an agent to help you take it from there. Have a list of your specific concerns and desires handy before you reach out, to help the make process even smoother.
Compare Day Care Insurance Quotes with an Independent Insurance Agent
We all know how valuable your time is, so why spend it doing all the hard work yourself? From business insurance packages to special add-on policies, our expert independent insurance agents will help you determine which types of coverage make the most sense for you and your new business.
Our independent insurance agents stay on top of the insurance industry and all the latest discounts so you don’t have to. That means they’ll help find the right coverage at the right price for you.
They’re not just there at the beginning, either. If disaster strikes, your agent will be there to help walk you through the claims process and make sure you are getting the benefits you’re entitled to. Now that’s thinking ahead.
TrustedChoice.com Article | Reviewed by Paul Martin
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