“An insurer shall offer to any person who is a licensed caregiver, optional liability and comprehensive coverage for up to a total of 5 children and infants.”
This District of Columbia law provision reflects an increasingly widespread understanding in the United States that you are no longer merely a homeowner when you open your house to care for the children of others. You run a business. Furthermore, it is highly likely that you are not covered by your regular homeowners insurance. The market for in-home childcare insurance is changing quickly in 2026. A historic bill that would specifically address how residential property insurers deal with families who operate large family daycare centers is presently being considered in Florida. In the meantime, families all throughout the nation are learning that their “nanny share” arrangements—in which two or more families share a nanny—fall into a regulatory limbo that might expose everyone.
This guide outlines the precise coverage you require, discusses why a standard policy is insufficient, and explains how to safeguard your family, your property, and the children entrusted to your care.
The Hard Truth: Your Homeowners Policy Was Never Designed for Childcare
Let’s start with the fundamental reality that every insurance professional will tell you: Homeowner (HO) policies aren’t meant to insure businesses that are run out of a home .
The premiums you pay for homeowners coverage are calculated based on the assumption that your home is being used as a residence—not as a place of business where unrelated children are dropped off daily, where employees work, and where members of the public (parents) regularly visit.
What Standard Homeowners Policies Won’t Cover
According to insurance industry sources, a standard HO policy typically provides no liability coverage for business activities such as :
- Customers who slip and fall on your premises (including parents dropping off children or children in your care)
- Damage to business property (equipment, supplies, or toys owned by the daycare or by the families you serve)
- Injury caused by things you make or services you provide (including allegations of negligence in supervision)
- Medical expenses for employees if they are injured while performing business-related tasks
In fact, if you send your nanny to run a business-related errand and she is injured, your policy will likely deny medical expense coverage entirely .
The Property Damage Gap
Even your physical property may lose coverage if it’s used for business. If you store daycare equipment or supplies in your garage and that garage burns down, the fire loss may become ineligible for coverage because of the business use .
A basic homeowners policy might offer some protection for business personal property, but the limit is often as little as $2,500—far less than the cost of replacing toys, cribs, safety equipment, and other childcare supplies .
Nanny Shares vs. Licensed Daycare: Two Different Regulatory Worlds
One of the most important distinctions in 2026 is between informal “nanny share” arrangements and licensed in-home daycares. The insurance requirements—and available options—are completely different.
Nanny Shares: The Insurance Gray Area
A nanny share typically involves two or more families hiring a single nanny to care for their children together, usually in one family’s home. This arrangement often exists in a regulatory gap: it’s not quite a business, but it’s not purely personal either.
Key considerations for nanny shares:
- The nanny is an employee, not an independent contractor. The families employing her are legally responsible for obtaining Employers Liability insurance . In the UK, employers of nannies are legally required to have this coverage; while requirements vary by US state, the liability exposure is similar.
- The nanny needs her own Public Liability insurance to protect herself if a child is injured in her care or if she damages the family’s property . Many nannies mistakenly believe their employer’s homeowners policy covers them—it does not.
- The hosting family’s homeowners policy will not cover injuries to children from other families or claims arising from the nanny’s employment.
A UK specialist insurer explains: “Who pays for the insurance depends on the private arrangement you have with your nanny, but in any case, the nanny will be the policyholder” for Public Liability coverage . The employing families, meanwhile, must secure Employers Liability coverage.
Licensed In-Home Daycare: The Business Reality
If you are licensed by your state as a family child care home—whether “large” or “small”—you are operating a business. Period. Your homeowners policy will not cover you.
The good news is that specialized daycare insurance exists, and in many states, it’s required.
2026 Legislative Updates: Florida Leads the Way
Florida’s House Bill 765, currently moving through the legislature in the 2026 session, represents one of the most significant developments in childcare insurance law this year .
What HB 765 Does
This bill, which has passed through multiple committees and is now on the House calendar, addresses the insurance challenges faced by “large family child care homes”—licensed facilities that care for more children than standard family daycares .
Key provisions include:
- Prohibits residential property insurance policies from providing coverage for liability claims arising from the operations of large family child care homes . This clarifies what many insurers already practice: standard homeowners won’t cover daycare operations.
- Prohibits insurers from denying, cancelling, or refusing to renew a residential policy solely because the policyholder operates a large family child care home . This is a significant consumer protection—insurers cannot drop you just because you run a licensed daycare.
- Explicitly states that insurers have no obligation to defend against lawsuits covering such claims .
Effective Date: July 1, 2026, if passed .
What This Means for Florida Families
For Florida homeowners who run licensed family child care homes, HB 765 clarifies a murky area: your standard homeowners policy won’t cover your daycare operations, but your insurer can’t cancel your policy just because you operate one.
The solution? You must purchase separate business insurance for your daycare operations—a requirement that the bill makes clear is not optional if you want liability protection.
State-Specific Requirements: What Your State Requires
Insurance requirements for in-home childcare vary significantly by state. Here are examples from three different states:
Texas: Mandatory Liability Insurance
Texas law requires child-care providers to carry liability insurance coverage of $300,000 for each occurrence of negligence . The policy must cover injury to a child while on the premises of the child-care provider. Failure to maintain this coverage is grounds for suspension or revocation of the provider’s license .
This applies to licensed child-care homes, not informal nanny shares. The law defines a child-care provider as “the holder of a license issued under this chapter or an operator of a registered or listed family home” .
District of Columbia: Optional Coverage Must Be Offered
D.C. law takes a different approach: insurers must offer optional liability and comprehensive coverage to licensed caregivers for up to five children . This coverage is not automatic—you must request it, and the insurer must make it available.
The law also allows insurers to offer optional personal injury protection for children injured while passengers in vehicles operated as part of childcare activities .
Important limitation: Insurers can deny coverage for injuries resulting from abuse or neglect . This is a standard exclusion in most childcare liability policies.
Florida (Pending): Protection from Non-Renewal
As detailed above, Florida’s pending legislation would prohibit insurers from cancelling or refusing to renew policies solely because the homeowner operates a licensed large family child care home .
What Insurance Do You Actually Need?
Based on guidance from insurance professionals and specialist providers, here is the coverage you need for in-home childcare:
For Licensed In-Home Daycare Operators
| Coverage Type | Purpose | Typical Annual Cost (2026) |
|---|---|---|
| General Liability | Bodily injury to children, parents, or visitors; property damage | $500–$2,500 |
| Professional Liability | Claims of negligence, errors in supervision, inadequate care | $300–$1,200 |
| Abuse & Molestation Coverage | Allegations of abuse (sadly necessary for daycare operators) | $300–$2,000 |
| Commercial Property | Daycare equipment, toys, furniture, supplies | $500–$3,000 |
| Workers’ Compensation | Required if you employ staff (even part-time) | Based on payroll |
| Commercial Auto | If you transport children in your vehicle | $1,200–$3,000 |
Total estimated annual cost: $1,600–$8,700+, depending on facility size, number of children, and location .
For Nanny Share Families
If you are participating in a nanny share, the coverage needs are different:
| Who Needs Coverage | What They Need | Why |
|---|---|---|
| Employing Families | Employers Liability Insurance | Required by law in many states; covers claims from the nanny (wrongful termination, injury on the job, etc.) |
| Nanny | Public Liability Insurance | Protects the nanny if a child is injured in her care or if she damages the family’s property |
| Nanny | Professional Indemnity Insurance | Covers claims of professional negligence |
| Nanny | Business Equipment Coverage (optional) | Protects the nanny’s equipment (up to £1,000 in UK policies) |
| Hosting Family | Umbrella or Excess Liability Policy | Provides additional coverage beyond standard homeowners; some high-end policies (like Chubb’s Masterpiece) offer employment practices liability coverage for domestic staff |
For High-Net-Worth Families Employing Nannies
For families with significant assets, standard coverage may not be enough. Chubb, the high-net-worth insurer, offers Masterpiece Employment Practices Liability Coverage as an add-on to its personal or excess liability policies (minimum $5 million limit) .
This coverage includes:
- Protection against claims of wrongful termination, sexual harassment, and employment discrimination
- Insurance for reputational injury—including the costs of hiring a PR firm to manage reputation damage after a covered incident
This type of coverage is essential if you employ a nanny, housekeeper, or other domestic staff and want to protect your assets from employment-related lawsuits.
What to Do Right Now
If you are currently operating an in-home daycare or participating in a nanny share, take these steps immediately:
1. Review Your Homeowners Policy
Look for the “business pursuits” exclusion. If it’s there—and it almost certainly is—your policy will not cover injuries to children in your care or claims from parents .
2. Contact a Specialist Insurance Agency
Standard insurance agents may not understand the nuances of childcare coverage. Seek out agencies that specialize in:
- Daycare insurance (for licensed providers)
- Nanny insurance (for nannies and employing families)
Ask specifically about:
- General liability limits
- Abuse and molestation coverage (if operating a daycare)
- Professional liability (errors and omissions)
- Employers liability (if you employ a nanny)
3. Get Licensed If You Haven’t Already
If you are caring for children from more than one unrelated family, check your state’s licensing requirements. Operating without a license may not only be illegal but could also void any insurance you think you have.
4. Document Everything
Keep records of:
- Your insurance policies (homeowners and any business/childcare policies)
- Your license (if applicable)
- Employee records (for nannies or staff)
- Safety measures (CPR certification, background checks, secured play areas)
Insurers reward daycares that maintain:
- Fenced playgrounds
- Secured entry systems
- Fire and smoke protection
- Staff CPR certification
5. If You’re in Florida, Watch HB 765
If this bill passes (effective July 1, 2026), it will provide important protections against non-renewal for licensed large family child care homes . Contact your agent to understand how it affects your coverage.
Frequently Asked Questions
Does my homeowners policy cover a nanny share?
No. Your homeowners policy will not cover injuries to children from other families, claims from those families, or employment-related claims from the nanny .
Do I need insurance if I’m just watching a friend’s child for a few hours a week?
If you are caring for a child from one other family on an occasional basis, you may be covered under your homeowners policy’s “incidental” provisions—but this is a gray area. If you are regularly caring for children from more than one family, you need separate coverage.
How much does nanny insurance cost?
Specialist nanny insurance varies based on activities and coverage levels. Morton Michel, a UK specialist, offers policies with flexible add-ons including public liability, professional indemnity, and legal expenses . US rates vary by state and carrier.
Do I need workers’ compensation for my nanny?
If your nanny is an employee (and in most nanny share arrangements, she is), you may be legally required to carry workers’ compensation insurance. Consult your state’s labor department and an insurance professional .
Can I be dropped by my homeowners insurer for running a daycare?
In Florida, pending HB 765 would prohibit insurers from cancelling or refusing to renew solely because you operate a large family child care home . In other states, check your policy and state law—non-renewal for business activities is common.
The Bottom Line
Operating an in-home daycare or participating in a nanny share transforms your relationship with your home and your insurance. What was once a purely personal residence becomes, in the eyes of insurers and the law, a place of business.
Your standard homeowners policy was never designed for this. It will not cover you when it matters most—when a child is injured, when a parent files a claim, or when an employment dispute arises.
The solution is not complicated, but it requires action: purchase specialized coverage. For daycare operators, that means a comprehensive business policy with general liability, professional liability, abuse coverage, and commercial property. For nanny share families, that means ensuring the nanny has her own public liability coverage and that employing families have employers liability insurance.
In 2026, with new legislation in Florida clarifying insurers’ obligations and prohibitions, the path forward is clearer than ever. Don’t wait for an accident to discover you’re not covered.
Protect your home. Protect your family. Protect the children in your care.