Earlier this year, a child care center in southern Maine faced minor issues during a routine inspection: a refrigerator was slightly too warm, employee paperwork was misplaced, and a first aid kit lacked tweezers.
Windham Raymond School Aged Child Care, a highly rated child care provider, quickly resolved these issues. However, Program Director Hannah Marshall was shocked when the center’s liability insurance was unexpectedly dropped despite maintaining good standing and accreditation.
“Immediately I offered to get a letter of good standing from licensing, because we are in good standing,” Marshall said. “What we heard from our broker is that they were looking for reasons to drop child care programs.”
Child care providers nationwide face rising liability insurance costs, reduced coverage, and policy cancellations. A survey from the National Association for the Education of Young Children revealed that 80% of providers experienced increased costs in the past year. This surge impacts centers’ thin profit margins, leading to higher tuition for parents, as noted by Heather Marden of the Maine Association for the Education of Young Children.
“Families cannot bear this financial burden being passed on to their child care costs,” Marden said.
Marshall faced challenges securing a new insurance provider, ultimately paying 25% more for coverage, now exceeding $11,000 annually. Rising insurance rates are a widespread issue, with centers like Kinder Academy in Philadelphia reporting increases of up to 300%.
Sam Phillips, a Texas-based insurance agent, shared that finding comprehensive liability insurance is increasingly difficult. Many policies now exclude crucial coverages, leaving centers vulnerable.
Phillips noted, “They already have such a little profit margin as is, so when they’re hit with premium increases this large, a lot of people are operating at a loss right now.”
Child care insurance challenges were spotlighted in a Philadelphia town hall, where nearly all participants reported soaring premiums. Spina discovered her center’s insurance costs rose by 45%, with others facing even steeper hikes.
Insurance premiums across various sectors have risen significantly since the pandemic, with child care centers particularly struggling due to limited options. Phillips noted that while some national companies still offer child care liability insurance, many exclude key coverages or impose stringent requirements.
The difficulty in securing affordable insurance threatens the viability of many centers, already strained by the expiration of federal stabilization funding. A Texas-based insurance agent warned that without viable insurance options, some centers may be forced to close.
For family child care providers, the decision to maintain liability insurance is difficult. Jessica Sager, CEO of All Our Kin, highlighted the narrow margins these providers face, often forcing them to choose between personal compensation and liability coverage.
Despite the financial strain, experts stress the importance of liability insurance in ensuring children’s safety and protecting centers from unforeseen accidents.
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