On March 26rd, the National Governors Association Children and Families team hosted the monthly meeting of the Human Services Policy Advisors Institute (Human Services Advisors Network), featuring the National Association for the Education of Young Children (NAEYC) presenting on liability insurance for child care and early learning programs.
Premiums for liability insurance, a necessary and often mandatory State licensing requirement for early childhood education (ECE) programs, has exponentially increased costs associated with operating child care across the United States. Additionally, liability insurance is becoming increasingly more difficult to access for ECE providers, especially for home-based providers. With child care out of reach for many families due to high program costs as well as provider deserts, barriers like liability insurance further complicate government efforts to increase, much less maintain, the supply of child care for the families that need it. This call explores ways states and territories can partner with the child care industry, licensing agencies, and advocates across the country to support the ECE ecosystem through liability insurance affordability and accessibility.
A recording is available here. Please contact the NGA Children & Families team for the password.
Speaker
- Daniel Hains, Chief Policy and Professional Advancement Officer, National Association for the Education of Young Children
Takeaways
- Child care providers are struggling to both access and afford liability insurance, which presents challenges to government efforts to maintain child care supply
- Some insurers have stopped providing liability insurance plans altogether, while others have dramatically increased premiums making liability insurance cost-prohibitive for providers
- Family child care providers have been hit hardest
- Keep an eye on how deregulation efforts may impact insurance underwriting trends
- Even in states/territories where such insurance isn’t mandated, providers report they don’t want to take the risk of operating without insurance for fear of costly litigation
- Access to and affordability of liability insurance is impacting care providers across many demographics, including child welfare and elder care.
NAEYC Presentation
- NAEYC’s survey of child care providers indicates a majority of respondents maintain liability insurance, and their costs have increased.
- Access is a big problem for providers, many insurers offer limited to no coverage, while other insurers deny coverage completely for child care providers
- Based on the results of NAEYC’s survey, the top reason cited for non-renewal or denial of insurance was that the carrier was no longer insuring child care programs.
- Without liability insurance, providers may be inclined to retain a higher amount of cash on hand to cover such liabilities and costs directly, which results in less available resources for upholding and maintaining day-to-day quality and/or costs passed along to consumers (higher tuition rates for families)
- Given the thin profit margins that providers already operate under, most providers are not inclined to risk the threat of enhanced financial exposure, instigating program closures.
- A majority of providers reported that without access to liability insurance, their programs would have to close or serve fewer families due to loss of license or funding.
- Even when coverage is available, small infractions can lead to loss of coverage, which contributes to the growing prevalence of child care deserts and/or scarce choices for families
- NAEYC’s suggested solutions and best practices:
- Educate insurance and licensing agencies on the context and impact of regulations and citations, and actively assist in collaborative efforts to support safety, clarity, and consistency.
- Directly subsidize and/or control the costs of insurance through discounts, reinsurance pools, caps, policy changes, and other mechanisms.
- Learn more about what providers are facing, including commissioning legislative and research studies on the availability and affordability of liability insurance.
- State Spotlights:
- Nebraska proposed an interim study to examine the Child Care Licensing Act and the availability and affordability of liability insurance for licensed child care providers across the state.
- Vermont issued guidance in 2024 to include community- and home-based child care and early earning programs in state-funded programs.
