As the Early Childhood Education and Care (ECEC) sector continues to recover from the pandemic’s economic shocks, a quieter but equally urgent crisis is unfolding: the skyrocketing cost and shrinking availability of child care liability insurance for child care facilities. While often overlooked in broader policy discussions, child care liability insurance is a foundational element of safe, sustainable child care. Without it, programs close, staff lose their jobs, and families lose access to the care they depend on.
Even More Alarming is the Fact That It’s Not Just a Child Care Problem
According to a National Survey performed by Together the Voice on “Insuring Care,” there is a child care liability insurance crisis impacting all “child and family-serving organizations” and the communities they serve; this also means Child Welfare and the programs that provide support to these children. Many nonprofits and others provide prevention services, foster family services, including kinship care, and a variety of therapeutic services. And insurers are sometimes refusing to cover providers doing this child welfare-related work. The situation is creating a potential service cliff for children and families served by community providers across the nation
Why Child Care Liability Insurance Matters
Liability insurance protects child care providers from financial losses due to accidents or injuries, an essential safeguard in environments where young children play, explore, and learn. For many programs, it is not just best practice; it is a legal or contractual requirement.
A recent national survey conducted by NAEYC in 2024 reveals just how widespread and damaging this issue has become. NAEYC worked with provider associations to issue a survey; they received responses from over 1,100 early childhood educators across 49 states and D.C. The findings paint a sobering picture of rising costs, reduced coverage, and growing inequities.
According to the survey:
- 88% of respondents said child care liability insurance protects their programs.
- 82% said it protects the families they serve.
- 62% cited it as a state requirement.
Child Care Insurance Costs: A Breaking Point for Many Providers
The survey data is clear: child care liability insurance costs are rising sharply.
- 80% of respondents reported increased child care insurance costs in the past year.
- Among child care centers, 89% saw increases that exceeded up to $10,000 annually.
- Programs serving families receiving subsidies were hit hard, with 83% reporting cost hikes.
Shrinking Child Care Insurance Coverage: Growing Risks for Providers
Even when providers can secure child care insurance, the scope of coverage is narrowing.
- 36% reported reduced liability limits or new exclusions.
- 26% saw new restrictions on field trips, playgrounds, communicable diseases, and more.
- 54% of family child care providers reported changes to their coverage.
- 96% of survey respondents said that losing access to child care liability insurance would directly reduce the number of children and families they could serve.
- 65% said they would have to close their program entirely.
- 76% of respondents reported knowing of at least one program in their community that had closed. About 25% knew of four or more.
Solutions for Affordable Child Care Insurance and Liability Coverage
Survey respondents called for:
- State-supported child care insurance pools or subsidies, discounts, and caps to make coverage affordable, or engaging in research studies on the issue.
- Policy changes to prevent insurers from dropping providers unfairly.
- Incentives for programs with strong safety records, such as tax credits or premium discounts.
- Education for child care insurance and licensing agencies regarding the context and impact of regulations and citations, and active assistance in collaborative efforts to support safety, clarity, and consistency.
Some states are already acting to find creative solutions. For example, Nebraska has proposed a legislative study on child care liability insurance access, and Vermont has issued guidance to support inclusion of home-based providers in state-funded pre-K programs.
These Important Measures Take Time to Implement; What Can Be Done Now?
Samantha Phillips, a nationally recognized insurance expert is offering solutions to help providers navigate the child care liability insurance problem. A child care insurance agent nationally recognized in her field, Samantha offers up information that is startling:
- It’s not just about child care liability insurance. To be fully protected, child care providers often need to consider other types of insurance, such as Property, Business Income/Interruption, Professional Liability, Business Auto Liability (if they transport), Abuse and Molestation Policies, and others.
- Right now, the average cost per site for comprehensive coverage is around $25,000. However, if a single site has an open liability claim, that cost can jump significantly—from $25,000 to $45,000.
- Therefore, unlike in the past, when policies were bundled together, it might make more sense to separate them, particularly if a provider has multiple locations. This way, if a problem occurs in one facility, price increases or child care insurance losses will affect only that one location.
- Many commercial child care insurance policies do not automatically renew. The facility must track when it’s due and provide required information on a timely basis.
In her book, entitled “The Child Care Insurance Playbook: A Guide to Protecting Your Early Education Business,” Samantha’s common-sense approach emphasizes that child care providers must take control of their narrative. While this certainly refers to every aspect of insurance, including how policies are structured, there are proactive steps providers can take to improve their chances.
She suggests controlling the narrative given to underwriters by addressing risk mitigation strategies that might result in a better deal. She describes the narrative as a “detailed, well thought out story about your early education business that shows the steps you have taken to minimize risk” and keep children safe (and serves as a cover letter for the application). Here’s how this strategy helps providers:
- Showcases proactive risk management.
- Addresses potential concerns up front.
- Highlights the strengths of the business.
- Builds trust with insurers.
Conclusion: Building a Sustainable Child Care Insurance Strategy
Early education providers must have help from states to resolve this crisis or they will close, and states are rising to the challenge. However, state administrators could pursue both long- and short-term solutions. One of the best short-term strategies might be to train providers on these issues as an important part of developing a sustainable child care business. This could include skill-building exercises in writing insurance narratives that clearly show how providers mitigate risk, and the specific provider policies that address these major concerns for insurers.
Frequently Asked Questions
What is the average cost of child care insurance in 2025?
Right now, the average cost per site for comprehensive coverage is around $25,000. However, if a single site has an open liability claim, that cost can jump significantly—from $25,000 to $45,000.
Do home daycare providers need liability insurance?
Yes. Respondents said child care liability insurance protects their programs, and 82% said it protects the families they serve. In addition, 54% of family child care providers reported changes to their coverage.
What are state requirements for child care insurance coverage?
Some states require insurance to legally operate, while some state rules require providers to notify parents as to whether they have insurance coverage.for their facility.
Resources:
NAEYC Liability Insurance and Early Childhood Education Survey Brief 2024
Insuring Care: How Liability Access Threatens Community Services For Children
Phillips, S. (2025). The Child Care Insurance Playbook: A Guide to Protecting Your Early Education Business.
Special thanks to Leigh Bolick, M.Ed. for her research into this evolving topic.