Insurance for home daycares: New rules and insurance requirements may not match up
Unlicensed home daycares saw some major changes when the Ontario Child Care and Early Years Act went into force in August of 2015. Under the new rules, caregivers running an unlicensed home daycare must:
- Not be caring for more than two children under the age of 2
- Not look after a total of more than five children, including any of their own under the age of 6
These new rules bring Ontario regulations into alignment with what insurance companies have been asking their insured unlicensed home daycares to do for a while – specifically limiting the amount of children being looked after to five, including their own children. However, there may be additional insurance guidelines that you should take into consideration if you are running either a licensed or unlicensed home daycare business.
Insurance and Home Daycares
If you are looking after children in your home, you are considered to be running an unlicensed home daycare by both the government and your insurance company. It goes without saying that caring for children can carry huge additional liability, and you should make sure that you are insured for that liability.
Insuring a home daycare works much the same as insuring a business where a sole proprietor is working at home. You apply for an extension and endorsement to your homeowners policy or renters insurance. This is done with an application that outlines all of the details on the business that you can fill out with your insurance broker.
Insurance companies haven’t changed their rules around what they cover for home daycare business – if you are running a home daycare business in compliance with the new Act, you are likely meeting their guidelines as well – except in the case of licensed home daycares, which are now allowed to look after up to six children, where insurance companies are typically only comfortable with five.
In general, insurance companies will grant a policy extension to licensed or unlicensed daycare businesses that have up to five children under the ages of 12 or 13, including the children of the caregivers. The daycare operation must be taking place in the primary residence under the homeowners policy – running a daycare out of a rental house is not usually permitted, and in that case a separate commercial insurance policy would be necessary.
Check your costs before starting a home daycare
Running an unlicensed home daycare is usually a case of taking in a few neighbourhood kids when one spouse chooses to stay home from work to earn some extra income. But it should be treated as a business – while other children are there, the focus needs to be on them rather than running errands, cleaning your house or doing any other kind of work from home. The increase in your homeowners insurance is usually not enough to wipe out income from taking in kids, but you should study the Act to ensure that you are meeting the standard of care laid out in it.
This includes meals and snacks that conform to the Canada Food Guide and CPR training which includes CPR for children. You must also have cots or sufficient beds for sleeping since children are not allowed to sleep on the floor. Make sure that the costs you are charging for each child are enough to cover any additional equipment, food and supplies you need to purchase.
You should also be conscious of what the fines are under the new Act; they have been raised significantly from the old regulations that governed home daycares. You can read more about the changes and what you need to have in place here.
What insurance covers at your home daycare
Insurance coverage is available for equipment associated with the business such as computers, change tables, extra furniture for the daycare, and more. The most important reason to get insurance for a home daycare is liability; while the minimum is $1 Million, you will want more than that for liability coverage to protect yourself against lawsuits should something happen to any of the children under your care.
If you have a question about insurance coverage for your home daycare, contact the experts at Kennedy. We’ve been North Bay’s hometown insurance broker for over 100 years, and want to help you get the best coverage for your business.