Running a daycare is one of the most trusted jobs there is. Parents hand you the most precious thing in their lives and count on you to keep them safe. That trust is exactly why childcare carries a heavier insurance responsibility than almost any small business, and why the question what insurance do I need for a daycare deserves a careful, honest answer. The stakes here aren't a broken window or a dented truck. They're a child's safety and your ability to keep your doors open if something goes wrong.
Whether you run a large center or watch a few kids in your home, here's the coverage that actually protects a Tennessee childcare business.
We're putting this first because it's the coverage childcare providers most need and most often lack.
Your standard general liability policy typically excludes abuse and molestation claims. Read that again, because it's the single most important thing in this post. Abuse and molestation is one of the costliest exposures in all of childcare to defend, and it's usually carved out of the base policy. It has to be added back as a specific endorsement or a separate coverage.
Here's why this can't be skipped: an abuse allegation, even one that turns out to be completely unfounded, can generate defense costs that run well into six figures. For a small daycare, a claim like that without coverage isn't a setback; it's the end of the business. Abuse and molestation coverage is typically inexpensive relative to the protection (often a few hundred dollars a year), and no childcare operation should run without it. If you take one thing from this article, make it this.
General liability covers the everyday accidents that come with a building full of active kids:
Childcare centers commonly carry general liability at $1,000,000 per occurrence or more, and licensing, landlords, and the parents themselves will expect it. This is the base, but on its own it leaves the two biggest childcare exposures (abuse claims and care-related mistakes) uncovered, which is why the next coverages matter so much.
Professional liability covers claims that your professional care fell short:
This is different from a simple slip-and-fall. It's about the judgment and care at the heart of what a daycare does, and general liability doesn't reach it. For a childcare business, professional liability belongs right alongside general liability and abuse coverage as core protection.
This is the trap that catches home-based providers, and it's the same lesson from our Airbnb post: your homeowners insurance excludes business activity in the home.
A child injured in your licensed in-home daycare is generally not covered by your homeowners policy, because running a daycare is a business, and homeowners policies specifically exclude business exposures. Relying on your home policy here is one of the most dangerous assumptions a provider can make, and it usually only comes to light after an injury, at the worst possible moment.
In-home providers need either a dedicated in-home daycare policy or a daycare endorsement built for it. These are written by specialized carriers and priced for the smaller scale of a home operation, so the cost is manageable, often in the range of a few hundred to a couple thousand dollars a year depending on your licensed capacity. Tell your agent you run childcare in your home, and get the right policy in place. Do not lean on your homeowners coverage.
If you employ teachers, aides, or assistants, Tennessee generally requires workers comp for most non-construction businesses at five or more employees. Childcare work involves lifting children, chasing toddlers, and the occasional injury, and workers comp covers on-the-job injuries to your staff. Many centers carry it before the legal threshold, and it's often a significant line item for a staffed center.
Depending on how you operate, several more belong on the list:
Costs depend heavily on whether you run a home operation or a center, and on your licensed capacity. In-home daycares often pay somewhere around $400 to $1,500 a year for core liability coverage. Commercial centers commonly run from about $1,100 to $4,000 or more a year for general liability, with larger or multi-location centers paying more. Abuse and molestation coverage is typically a modest add-on. Workers comp scales with payroll.
Weigh that against a single serious claim (a playground injury, a supervision lawsuit, or an abuse allegation that costs six figures just to defend) and proper coverage is simply the cost of running a childcare business responsibly.
What insurance do I need for a daycare at minimum? General liability, abuse and molestation coverage (which base general liability usually excludes), and professional liability for care and supervision claims. In-home providers also need a home daycare policy or endorsement, and any center with staff needs workers comp.
Does my homeowners insurance cover my in-home daycare? No. Homeowners policies exclude business activity in the home, so a child injured in your licensed daycare generally isn't covered. You need a dedicated in-home daycare policy or endorsement.
Why isn't abuse and molestation coverage automatically included? Because it's one of the costliest and highest-risk exposures in childcare, insurers typically exclude it from base general liability and offer it as a specific endorsement. It's essential, and it's usually affordable to add.
Do I need commercial auto if I transport kids? Yes. Transporting children is a serious liability exposure, and your personal auto policy won't cover business use. Any vehicle used to transport children needs proper commercial or transportation coverage.
Is insurance required to be licensed for childcare in Tennessee? Licensing standards and your specific coverage requirements should be confirmed with the state and your agent, but in practice childcare operations need liability coverage to operate responsibly, and many programs and facilities require proof of it. Confirm current licensing requirements with the Tennessee Department of Human Services.
What insurance do you need for a daycare? Abuse and molestation coverage first, because base general liability excludes it and one allegation can end an uninsured business. Then general liability for everyday accidents, professional liability for care and supervision claims, and, if you work from home, a real in-home daycare policy, because your homeowners insurance will not cover it. Add workers comp, property, and transportation coverage as your operation requires. This is a business where being underinsured isn't a gamble worth taking.
This is post #13 in our Starting a Business in Tennessee series.
If you run or are opening a daycare or in-home childcare in Mt. Juliet, Nashville, or anywhere in Tennessee, we'll make sure your abuse coverage, liability, and (if you're home-based) the right home daycare policy are all in place, and shop it across multiple carriers to keep it affordable. This is coverage we take seriously, because you're protecting kids.
Call us at 615-773-2886 or visit hutins.com. Let's make sure the families who trust you, and your business, are fully protected.