Alfred has owned a daycare in San Antonio for years, and he always felt confident that his insurance would protect him if something went wrong. That confidence faded quickly when a fire broke out in his daycare one night. Thankfully, no one was hurt, but part of his building was destroyed. The resulting damage was bad enough that he had to close for several months while repairs were made.
At first, Alfred wasn’t too worried because he had business interruption insurance to help offset the loss of income. He thought this would help keep his daycare afloat until he could reopen. But a few months into the reconstruction process, his business interruption payments stopped. His insurance policy had a separate limit on how much money he could recover.
His daycare still wasn’t ready to open, and the bills kept coming in. He assumed it would last until the daycare was fully repaired, but his coverage details limited what he could receive. With no tuition coming in from student families, Alfred was left scrambling to figure out how to pay his rent and staff.
Many daycare owners don’t realize how coverage limits can impact them until they file claims and read the details. Alfred learned the hard way that simply having insurance isn’t enough. You have to understand what your policy actually covers and where the limits are. Here are five common places Texas daycare owners learn about this problem.
Property Insurance Might Not Cover Full Replacement Costs
While Alfred was dealing with his financial problems, he ran into another issue. When he submitted his claim for the furniture, toys, and supplies that were destroyed in the fire, his insurance didn’t pay as much as he expected. That’s when he learned that his policy covered actual cash value instead of replacement cost.
This meant that instead of paying for brand-new items, his insurance company only paid what those items were worth after depreciation. His bookshelves, tables, and learning materials had lost value over time, and the payout wasn’t nearly enough to replace everything with new purchases.
Many daycare owners assume their insurance will cover the full cost of rebuilding after a disaster, but that depends on what type of coverage they have. If a policy only covers actual cash value, the daycare may end up paying a lot more out of pocket after a loss. Alfred had to make tough choices about what to replace right away and what had to wait.
Liability Limits Can Affect a Daycare’s Protection Against Lawsuits
While Alfred focused on getting his daycare back in shape, he started thinking about other risks he hadn’t considered before. He realized that his liability coverage could also have limits that might leave him unprotected in certain situations.
Daycares carry a lot of responsibility when it comes to the safety of children. If a child is injured and the parents decide to file a lawsuit, medical bills and legal fees can add up quickly. Alfred looked at his policy and saw that it only covered up to $1 million per incident. That sounded like a lot at first, but he learned that serious claims could easily go beyond that amount. Nevermind the reputational damage that comes with it.
Legal costs, settlements, and medical bills can drain a daycare’s resources fast. That’s why some owners choose to increase their liability limits or add umbrella insurance for extra protection. Alfred started looking into ways to strengthen his coverage so he wouldn’t be caught off guard in the future.
Wind and Hail Deductibles Can Lead to Unexpected Out-of-Pocket Costs
While Alfred’s fire was the biggest challenge he had faced, he also remembered another problem from a few years earlier. A hailstorm hit San Antonio, damaging his roof. He had insurance for storm property damage, but when he filed a claim, he found out that his wind and hail deductible was much higher than he expected.
Unlike other types of claims, wind and hail damage often comes with a separate deductible from the other property insurance deductibles. Most commercial insurance providers make them higher which meant Alfred had to pay thousands of dollars out of pocket before his insurance coverage even kicked in.
Texas weather can be unpredictable, and strong storms are common. Daycare owners need to understand how much they’d have to pay if a hailstorm caused damage to their property. Alfred wished he had checked his deductible earlier, so he wouldn’t have been surprised when he had to cover a big chunk of the repair bill himself.
Business Interruption Coverage Can Run Out Faster Than Expected
After the fire, Alfred thought his business interruption coverage would keep him from struggling financially while his daycare was closed. At first, it worked exactly as he expected. But he didn’t realize that his policy had a limit on how long those payments would last.
The repairs took longer than expected, which they always do. He found out that his policy only covered lost income for three months, while some policies can extend up to a year. Since his repairs weren’t finished, he had to start paying his business expenses out of his own pocket.
Many daycare owners assume business interruption coverage lasts until they can reopen, but that’s usually not the case. The coverage period can vary, and if the repair process takes longer than expected, they might run out of financial help before they’re back in business. Alfred now makes sure to review his coverage with his insurance agent each year to know exactly how long he’d be covered in case something happens again.
Abuse and Molestation Coverage Might Not Be Enough
As Alfred continued learning more about his insurance coverage options, he came across another policy detail he hadn’t thought about before. Every daycare owner hopes they’ll never have to deal with allegations of abuse, but the news tells it is more prevalent than we realize. As daycare business owners you have to be prepared for abuse accusations and legal expenses that come with them.
Some daycare insurance policies offer abuse and molestation coverage as part of their program, but the limits might not be enough to cover legal fees or settlements if a claim is made. Even false accusations can defense costs that can accumulate quickly. Alfred realized that while his policy did include this type of coverage, the payout limits were very low. If a major lawsuit ever came up, his daycare could be in serious financial trouble.
Daycare owners should check their liability policies to make sure they have strong protection in place. It’s not a topic anyone likes to think about, but ignoring it can put a daycare at risk. Alfred decided to increase his coverage limits to avoid a potential financial disaster down the road.
Work with an Experienced Insurance Professional
Alfred learned a lot of hard lessons from his fire and from reviewing his commercial insurance policy. He had always assumed his comprehensive coverage was enough, but after going through these struggles, he realized he needed better protection.
True Texas Education Insurance is a program offered through Insurance For Texans, to make sure he had the proper insurance coverage in place for his San Antonio daycare.
Instead of guessing about coverage limits or getting caught off guard by gaps in coverage, he now works with an experienced expert who understands Texas daycare insurance. He no longer has to worry about how long his business interruption coverage will last or whether his liability limits are enough. If another disaster strikes, he knows exactly what his policy will do for him.
If you want to make sure your daycare has the right coverage limits before an emergency happens, True Texas Education Insurance can help. Click the button below to get the protection your daycare needs today.