Image Name: Child Care Programs
Early this year, a child care program in southern Maine faced a routine inspection where it was cited for three minor issues: a refrigerator at the school was a couple of degrees too high, an employee’s paperwork was kept at the wrong location, and a first aid kit was missing a pair of tweezers. Windham Raymond School Aged Child Care, a nonprofit with a five-star quality rating, quickly rectified these issues. However, the program director, Hannah Marshall, was soon shocked to receive a notice from the center’s liability insurance company stating that it would be dropping the center’s policy despite the center’s licensing and accreditation remaining intact.
Insurance Companies Dropping Child Care Programs
Marshall’s offer to provide a letter of good standing from licensing was rejected. The broker informed her that insurers were looking for reasons to drop childcare programs. This scenario is becoming alarmingly common across the United States, with childcare providers reporting increased liability insurance costs, reduced coverage, and policies being canceled altogether.
Rising Costs and Financial Burdens
A survey of over 1,100 childcare providers from 49 states and Washington, D.C., released by the National Association for the Education of Young Children in August, revealed that about 80 percent had seen their liability insurance costs increase in the past year. This escalating issue puts significant financial strain on childcare centers, which already operate on thin profit margins. As insurance costs rise, so do the tuition fees parents have to pay, placing a heavy burden on families.
Heather Marden, co-executive director of the Maine Association for the Education of Young Children, emphasizes that families cannot bear the financial burden being passed onto their childcare costs. She argues that child care should be invested in more heavily as a public good to prevent these businesses from being shut down due to fluctuating pricing.
Image Name: The struggle to maintain affordable insurance
Struggles to Find Affordable Coverage
Marshall struggled to find another liability insurer for Windham Raymond School Aged Child Care and ended up purchasing a third-party insurance program that cost about 25 percent more than her previous policy, increasing annual expenses from $8,500 to over $11,000. Despite maintaining high standards, securing affordable liability insurance remains a challenge.
Widespread Industry Concerns
Last year, a town hall meeting in Philadelphia brought together about 80 childcare providers to discuss industry challenges, with insurance costs being a major topic of concern. Leslie Spina, who runs Kinder Academy, noted that nearly everyone reported significant increases in their insurance premiums, ranging from 30 percent to 300 percent more than previous rates.
A National Issue
Nationally, insurance costs are rising across various sectors, including home and auto insurance. However, for childcare centers, the challenge is finding insurers willing to provide liability coverage. Sam Phillips, a Texas-based insurance agent with about 300 childcare clients, explains that it has become increasingly difficult to find comprehensive coverage for childcare programs.
Impact on Child Care Centers
The struggle to maintain affordable insurance is pushing some childcare centers to the brink of closure. For example, Jen Vachon, who runs Parkside Child Learning Center in Bangor, Maine, saw her insurance costs rise by 18 percent last year. The increase, coupled with staffing challenges and fluctuating enrollment, has put her center at risk of closing.
In-Home Child Care Providers Face Tough Choices
For in-home childcare providers, who often aren’t required to have liability insurance, the decision becomes whether to pay the rising costs or risk operating without coverage. Jessica Sager, CEO of All Our Kin, notes that this is a particularly difficult choice for family childcare educators with even narrower profit margins.
The Necessity of Liability Insurance
Despite these challenges, neither childcare experts nor the centers recommend operating without liability insurance. It is a necessary safeguard to protect against potential lawsuits related to injuries and accidents, ensuring the safety and well-being of children.
Conclusion
The surging insurance costs are a significant threat to the future of child care. As a business owner, it’s crucial to understand the importance of liability insurance and advocate for better support and investment in the childcare sector to ensure its sustainability and accessibility for families.
