What are the daycare insurance requirements in California?

The rule for family child care homes

Under Health and Safety Code 1597.531, every family child care home must keep one of three things in force. The same rule is repeated in the licensing regulations at Title 22, section 102417, which the Community Care Licensing Division enforces.

Because the affidavit is an alternative, the Child Care Law Center, a California nonprofit, points out that liability insurance is not strictly mandatory. It still strongly recommends that providers buy it.

What the affidavit option really means

Skipping insurance saves premium, but it shifts the risk to you. The Child Care Law Center explains that signed affidavits, on form LIC 282, do not protect you from being sued. They only show that parents were told you are uninsured. If you rent, the form also tells parents that your landlord’s or HOA’s insurance may not cover child care losses.

Other practical drawbacks:

• Families can refuse to sign and choose an insured program instead.
• The signed forms are confidential records, so you cannot show them to a landlord or HOA.
• Licensing reviews the file at inspections, so every enrolled family needs a current signed form.
• Without a policy, there is no insurer to hire a lawyer or pay a settlement for you.

Your homeowners policy, landlord and HOA

California Insurance Code 676.1(c) makes it against public policy for a homeowners or other residential property policy to cover liability arising from a family child care home. That coverage can only come from a separate endorsement or policy with its own premium. If you are relying on your homeowners policy, you have no child care liability coverage.

The same law protects you in other ways. According to the Child Care Law Center, an insurer cannot cancel or refuse to renew a homeowners policy just because the owner runs, or rents to, a family child care home. Landlords and HOAs also cannot require a renter to buy child care liability insurance, although a rule that every tenant carry renters insurance still applies to you.

If you do carry insurance or a bond and you rent or share HOA common space, Section 1597.531(b) requires you to name the owner or HOA as an additional insured when three conditions are met: they ask in writing, adding them won’t cause cancellation or nonrenewal and they pay any extra premium.

Workers’ comp from your first employee

California’s Division of Workers’ Compensation says employers must carry workers’ compensation even if they have only one employee. That applies to a family child care home that hires an assistant and to every center.

Child day care centers, preschools and before- and after-school programs fall under class 9059 in California. The WCIRB’s approved advisory pure premium rate for that class is $1.936 per $100 of payroll for policies starting on or after September 1, 2026, up from $1.840 in 2025 and $1.630 in 2024. Insurers file their own rates on top of these loss costs, so treat them as a floor. As an illustration only, $1.936 on $150,000 of payroll is about $2,904 a year before insurer expenses and your experience modification.

CalChamber lists the consequences of going without required coverage:

• A stop order barring you from using employee labor, effective immediately.
• Liability for up to 10 days’ wages for employees’ time lost to the stop order.
• Personal liability for an injured employee’s benefits, as if you had been insured.
• A penalty of $1,500 per employee on staff when the stop order is served.

What child care centers are asked to carry

The liability minimum in Section 1597.531 is written for family child care homes. For centers, most insurance demands come from outside the licensing rules: workers’ comp for staff, landlords who want proof of general liability before signing a lease and funding agreements, referral contracts or partnerships that may require professional liability, as MoneyGeek notes in its 2026 daycare cost report.

Centers that transport children also need commercial auto coverage for those vehicles. Confirm the requirements for your facility type with your Community Care Licensing regional office and read every lease and funding contract for insurance clauses before you sign.

What daycare insurance costs in California

California is one of the most expensive states for daycare coverage. MoneyGeek’s modeled estimates, built from 10 major commercial insurers for daycare centers with fewer than five employees, put California at the top of its state range for a business owner’s policy. These are planning figures, not quotes. Home providers, larger centers and programs with claims will see different prices.

How to meet the requirement without overpaying

The cheapest legal route, parent affidavits, is rarely the cheapest outcome after a serious injury claim. These steps keep the cost of real coverage down:

• Buy a policy written for child care. Your homeowners policy cannot legally cover the business, so don’t pay for an endorsement that doesn’t fit what you do.
• Ask whether abuse and molestation coverage is included. MoneyGeek treats it as a separate, specialized coverage, and many general liability policies limit or exclude it.
• Consider a business owner’s policy if you qualify. MoneyGeek estimates a BOP costs about 10% less than buying its coverages separately.
• Let landlords pay for their own additional insured status, as Section 1597.531(b) allows.
• Report payroll accurately and in the right class, because workers’ comp is priced per $100 of payroll and corrected at audit.
• Compare several insurers. A broker such as Florin can compare child care policies from several insurers side by side.