Churches all across Texas either have started daycares and preschools recently, or are contemplating it. A Church in Amarillo that has been serving families for years did exactly this. They are now hosting a small, non-profit daycare in their church during the week that provides affordable childcare to parents who need a safe place for their kids. They are working to help lower income families break the cycle of poverty.
The daycare is run by a board of directors, a group of volunteers who make big decisions about how the daycare operates. Many of them are church members, but some are not.Last year, the board had to make some tough financial choices.Costs were rising, and they were running out of funding. To keep the daycare open, they had to increase tuition and cut some programs.
These decisions weren't easy. They never are, and not everyone was happy about it. Some parents were upset, saying they were being priced out of a daycare they had trusted to help them escape this trap.
When a few even started talking about legal action, claiming the board was mismanaging funds, That’s when the board members realized something. They weren’t sure if they were protected if someone sued them over a decision they made for the daycare.
The school does have general liability insurance, but would that cover them? Would they have to pay out of pocket if someone took legal action against them personally?
Many daycare owners and board members don’t think about these questions until they are facing a problem. That’s where Directors and Officers Liability Insurance Coverage comes in.
D&O Insurance Protects Daycare Leadership from Costly Legal Claims
The board of the daycare made the best decision they could with the budget they had, but that didn’t stop parents from being upset with the decision. If someone does sue them for mismanaging money, the individual board members could be held personally responsible for those decisions. Without the right liability coverage, they might have to pay for legal defense costs and settlements from their own pockets.
Directors & Officers insurance protects the childcare center leadership when they are accused of making poor financial decisions, mismanaging funds, or running the business in a way that others feel is unfair. It covers legal costs, settlements, and additional expenses related to these types of claims.
It is important to realize this is not just large daycare centers that need this coverage. Small, privately owned daycares and nonprofit boards that manage child care centers like this one face the same risks. Even though they aren’t trying to make a profit, their financial decisions can still be challenged. Without liability protection, the personal assets of board members and business owners could be at risk.
The board members in Amarillo realized they couldn’t afford to take that chance. They needed comprehensive coverage that protected their daycare’s future as well as their own personal finances from financial risks.
D&O Insurance Covers What General Liability Does Not
When the board first looked into their business insurance policy, they thought they were covered. They knew they had general liability insurance, which they assumed would protect them if someone filed a claim. But when they spoke with an insurance professional, they realized general liability only covers bodily injury and property damage. Business decisions falls under different business insurance coverage.
That meant if a child was injured on the playground, their policy would cover medical bills and legal costs. But if someone sued the board for mismanaging funds or making unfair policy changes, general liability wouldn’t help at all.
D&O coverage fills that insurance coverage gap by providing more comprehensive protection for lawsuits related to financial decisions, daycare policies, and accusations of poor management. Without it, daycare leaders could be left with no protection when facing serious legal claims.
After learning this, the board members saw how risky it was to run the daycare without D&O insurance. They had worked hard to serve families in their community, and they didn’t want a legal liability battle to put everything in jeopardy.
Legal Defense Costs Can Be Devastating Without Coverage
There are times when families may not understand the potential risks a childcare center is facing and start a frivolous claim process. Even when a lawsuit has no real basis, defending against it still costs money. Lawyers charge high fees, court costs add up, and if a case drags on for months, the expenses can be overwhelming.
When the board realized that even if they proved they had done nothing wrong, a single lawsuit could drain the daycare’s funds. D&O insurance helps cover these costs, allowing the daycare to keep running without financial ruin.
Without this coverage, daycare leaders might have to cover legal expenses out of their own pockets. Many small daycares and nonprofit organizations can’t afford to fight a lawsuit, even if they know they are right. Don't allow an organizational risk that can be inexpensively fixed to become an insurmountable problem because of one legal battle.
Work with an Experienced Insurance Professional
Once daycare facilities learn about D&O insurance, it becomes obvious to add this to their commercial insurance package. It is important to work with an expert in Texas child care insurance to make sure your daycare has the right coverage.
The True Texas Education Insurance program, solely offered through Insurance For Texans, will help your daycare get the protection needed. The experienced, independent agents start by asking questions about your operations and unique characteristics. They use the answers to these questions to find customized daycare insurance coverage options that match your needs and budget.
Those options mean you don’t have to worry about what might happen if someone challenges your decisions. You can focus on keeping the daycare running, knowing it has the types of coverage in place it needs if a legal issue ever comes up. We have your back when your back is on the floor.
If you run a daycare D&O insurance can help protect the people making the tough decisions. Click the button below to learn how True Texas Education Insurance can help your daycare’s leadership stay protected.