These risks are real.
I once asked an insurance agent to give me examples of actual claims his company had paid to parents using family child care providers. Here are a few he cited:
* A day care child pulled down a bottle warmer on top on another child - $525,000
* An older child dropped an infant on the floor - $300,000
* A bookshelf fell on a child - $273,000
* A two-year old was poisoned with E. Coli - $130,000
The only way to protect yourself in these situations is to purchase business liability insurance.
Your homeowner's insurance won't cover you for injuries or damages suffered during the course of your business.
Because not all business liability insurance policies are the same, I strongly recommend that you don't look for the most inexpensive insurance. You get what you pay for. Here's a checklist to use when shopping for insurance:
* Professional liability coverage for failure to adequately supervise children
* Child/sexual abuse coverage that covers you, your family members, and your employees
* Accident medical coverage for injuries suffered by the children in your care
* Legal defense if you are accused of child abuse/neglect and risk the loss of your license
* Coverage for accidents when you are away from home with children
How much insurance coverage should you buy? As much as you can afford! Some insurance is better than no insurance. Insurance policies will set two coverage limits: "per occurrence" (the amount of coverage for one incident) and "aggregate" (the maximum amount the policy will pay).
I recommend purchasing $1 million "per occurrence" and $3 million "aggregate". The cost difference between lower insurance coverage and these numbers is very low. See my article.
In my opinion, no child care provider should care for children without adequate business liability insurance. I've heard from child care providers who charge parents an extra amount for the week the insurance premiums come due to help offset some of the cost.
Here's an insurance directory posted on the website of the National Association for Family Child Care.
Image credit: liability-insurance-central.com
For a more complete explanation of business liability insurance see my book Family Child Care Legal and Insurance Guide.