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When parents entrust their children into your care, you are responsible (liable, in insurance and legal terms) for keeping them safe. But no matter how carefully you watch the children in your facility, accidents can and do happen. This leaves you open to unique liability exposures. For example, parents could sue you for negligence if their child is injured while in your care. If you were found guilty and had no insurance, you would have to pay the child's family out of your own pocket.

Luckily, liability insurance can protect you and your assets up to the limits of the policy you buy. The policy limit is the maximum amount the insurance company will pay for covered claims. Claims involving injured children are always volatile and emotional-often leading to larger claims. So if you buy a policy with limits of $1 million, your covered claims will be paid up to that amount.

Why Day Care Programs Need Liability Insurance
There are two important reasons to buy liability coverage. First, in the event of a lawsuit, you will have the broad expertise of the insurance company to defend you in court and ultimately pay your covered claims. Second, the insurance company has extensive knowledge of child care claims, and can offer loss control advice that reduces the chance of a loss. A loss that "does not occur" keeps your premiums down and, more importantly, children safe.

Selecting a Company
An independent insurance agent can help you design a coverage program that suits your needs. Their role is to be your "insurance consultant," and their fee is paid by the insurance companies they represent. When your agent recommends a company, look for the following:

• An A.M. Best rating of "A" or higher (A.M. Best rates insurance companies on the basis of their financial strength and ability to pay claims.)
• A company that writes a lot of child care business or has a special program for the industry.
• A company that has a solid loss control and risk management program to help you maintain a safe environment.

Always have your agent review your policy's terms, conditions, and coverage. Ask questions if you need clarification-both the amount of coverage (limit) and what is covered are important. Like anything else you buy, cheaper isn't necessarily better. A cheaper policy may not offer all the special coverage you need, so compare policies carefully and choose the one that gives you everything you require. The good news is, you can write off the entire cost of your liability insurance as a tax-deductible business expense.

Thomas K. Smith
Vice President
Markel Insurance Company