Home daycare insurance in Washington: what the state requires and what your homeowners policy will not cover
Washington is unusual: you can legally run a licensed family home child care without insurance. You just have to hand every parent a form saying so. Most providers do not know that is the choice they are making.
The short answer
Washington law gives a licensed family home child care provider two legal options: show the department proof of insurance, or opt out. If you opt out, RCW 43.216.700 requires written notice of your insurance status to every enrolled family, on a state form, with a copy kept on file.
Whichever you choose, your homeowners policy is not the answer. Homeowners contracts exclude business pursuits, and caring for other people's children for money is a business. This is the most common uninsured arrangement in family child care, and it surfaces at the claim.
Three coverages do the real work: general liability for injuries and property damage, professional liability for the care itself, and abuse and molestation coverage — which is routinely excluded or sublimited and has to be asked for by name. L&I is separate, and only if you have employees.
Washington State Legislature — RCW 43.216.700
Washington State Department of Children, Youth & Families — Family home liability insurance form
MoneyGeek — Average daycare business insurance cost 2026
Independent agency · commercial lines across Washington
What Washington actually requires
Less than most providers assume, and the gap is filled by paperwork rather than coverage. RCW 43.216.700 lets a licensed family day care provider either give the department proof of insurance, or opt out of carrying it — provided every enrolled family gets written notice of that status on a standard department form.
Illustration — not an actual document
What the opt-out really means
That the law is satisfied and you are not. The notice protects the parent's right to know, not your house. A family that was told in writing and enrolled anyway has still lost nothing of their own claim — they simply cannot say they were misled.
And what it does to enrolment
Handing a new family a form that says you carry no liability insurance is a conversation. Some parents will not mind. Others will compare you to the provider down the street who hands them the opposite form. That is a business consideration as much as a legal one.
Why your homeowners policy does not cover it
Because homeowners contracts exclude business pursuits, and paid child care is a business no matter how informal it feels. The exclusion is not aimed at you and it is not hidden — it is simply the reason a homeowners policy costs what it costs rather than what a commercial policy costs.
What falls into the gap
- A child injured in your home. The core exposure, and the one homeowners liability would have handled if it were a guest rather than a customer.
- Damage you cause on an outing, at a park or on a field trip.
- Equipment and the space itself — cribs, gates, play structures — which a homeowners policy treats as business property with a low cap or none.
- Anything alleging how the care was provided, which is professional liability and outside a homeowners policy entirely.
The endorsement question
Some carriers offer an in-home daycare endorsement on the homeowners policy, and for a very small operation it can be enough. Read the limits before relying on it: these endorsements commonly cap the number of children, leave out professional liability, and exclude abuse allegations completely.
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The three coverages that do the work
They answer three different accusations: that someone got hurt, that you did the job badly, and that something happened to a child in your care. Most providers buy the first, assume the second and never hear about the third until they read an exclusion out loud.
| Coverage | The accusation it answers | Where it usually lives |
|---|---|---|
| General liability | A child fell, a parent tripped, you damaged property | The base policy — this is what a licensing checklist looks for |
| Professional liability | The care itself was negligent — supervision, medication, a food allergy | Sometimes bundled, often separate. Ask, do not assume |
| Abuse and molestation | An allegation involving a child in your care | Frequently excluded or sublimited. Must be requested by name |
| Business property | Your cribs, gates, play equipment, supplies | A business owner's policy, or a commercial property section |
| Workers' compensation | An employee of yours was injured | Washington L&I only — no agency sells it here |
The one that gets excluded
Abuse and molestation coverage is the allegation this trade fears most and the one most likely to be missing. Carriers underwrite it separately, and it is commonly excluded from a standard liability form or capped well below the policy limit — without ever appearing on a certificate of insurance.
Why an allegation costs money even when it is false
Because defending it does. The legal cost of answering an accusation arrives whether or not the accusation survives, and in a business built on word of mouth the reputational cost arrives immediately. Coverage that includes defence is doing most of the work here.
The question to ask in one sentence
Does this policy include abuse and molestation coverage, at what limit, and is defence inside or outside that limit? If the answer takes more than a minute, ask for it in writing.
What it costs
Published national benchmarks for small daycare operations put general liability around $154 a month, a business owner's policy around $243 and professional liability around $184 — modeled from ten commercial insurers on profiles with fewer than five employees. Those are modeled estimates for budgeting, not live quotes.
Why a home operation usually sits below those numbers
Those benchmarks blend centre-style operations with home ones. A family home caring for a handful of children in a residence carries a different exposure than a commercial centre, and prices differently. The only way to know your number is to run it, which costs nothing.
What moves it
How many children, their ages, whether you transport them, whether anyone works with you, whether there is a pool or a trampoline, and your claims history. Those seven answers are most of the underwriting.
If you have employees
Workers' compensation becomes mandatory from the first employee's first hour, and in Washington it comes only from the Department of Labor & Industries. No agency can sell it to you here. L&I assigns a risk class to the work and charges a rate per hour worked rather than a premium on payroll.
The assumption that costs the most
That a helper who is family does not count. If you pay someone and direct their work, Washington generally treats that as employment regardless of the relationship. It is the same trap that catches home-based cleaning businesses, and for the same reason.
Where to start
The state side is on our workers' compensation page, and we will walk you through it even though we earn nothing from it. Everything else is on the business insurance page. If you are figuring out the paperwork side of running a business from home, the licence and UBI steps are the same ones. A free quote takes a few minutes — we are in Tacoma and Auburn.
Frequently asked questions
Is insurance required for a home daycare in Washington?
Not exactly. Washington law lets a licensed family home provider either show proof of insurance or opt out — and if you opt out, you must give every enrolled family written notice of your insurance status on a state form and keep a copy on file.
Does my homeowners policy cover my in-home daycare?
No. Homeowners policies exclude business pursuits, and caring for other people's children for money is a business. This is the single most common uninsured setup in family child care, and it usually only surfaces when a claim is denied.
What are the three coverages a home daycare usually needs?
General liability for injuries and damage, professional liability for how the care itself was provided, and abuse and molestation coverage, which is often excluded or sharply sublimited and has to be asked for by name. Add workers' compensation from L&I if you have employees.
Why is abuse and molestation coverage treated separately?
Because carriers underwrite it separately. It is frequently excluded from a standard liability form or capped far below the policy limit, and it is the allegation this trade fears most. A policy that satisfies a licensing checklist can still be silent on it.
Can I add a rider to my homeowners policy instead of buying a business policy?
Some carriers offer an in-home daycare endorsement, and for a very small operation it can work. Read what it limits: these endorsements often cap the number of children, exclude professional liability, and leave abuse allegations out entirely.
Do I need insurance if I only watch two or three children?
Licensing thresholds and insurance sense are different questions. Even a small operation carries the same kinds of claims — a fall, a dog, a food allergy, an accusation — and your homeowners policy will not answer for any of them.
Keep reading
Sources
- Washington State Legislature — RCW 43.216.700 — proof of insurance, or written notice to parents of your insurance status.
- Washington State Department of Children, Youth & Families — Family home liability insurance form, DCYF 15-894.
- MoneyGeek — Average daycare business insurance cost, 2026 — modeled premiums from 10 commercial insurers, profiles under five employees. Modeled estimates, not live quotes.
- Washington State Department of Labor & Industries — Risk class lookup.
This article is general information about insurance in the state of Washington. It is not legal advice and it is not an offer of coverage. Whether a policy covers a given loss depends on its own wording, its endorsements and its exclusions; read yours, or send it to us and we will read it with you. Anel Galicia is a licensed insurance producer in the state of Washington.