What are the daycare insurance requirements in Texas?

The Texas liability insurance rule in 2026

House Bill 2789, passed in 2025, cut the liability coverage required by Human Resources Code section 42.049 from $300,000 to $100,000 for each occurrence of negligence, according to the Texas Senate Research Center danalysis of the bill. The same bill made the same cut for listed family homes under section 42.0495. Both changes took effect January 1, 2026.

HHSC Child Care Regulation confirmed the change in Provider Guidance Letter 26-11001, published January 13, 2026, and said it intends to update the Texas Administrative Code to match. Until it does, the minimum standards for centers and homes still print the $300,000 figure, which is why so many websites repeat it. The statute now controls.

The rule applies to every permit type below. HHSC s handbook exempts certified (state-operated) operations, small employer-based child care, shelter care programs and listed family homes that care only for related children.

What the policy has to cover

Under section 42.049, the policy must cover injury to a child while the child is on your premises or in your care. The requirement is not limited to your building, so check that your policy also responds on field trips and during transportation.

The $100,000 figure is a floor, not a recommendation. One serious injury can exceed it, and landlords and contracts often ask for higher limits. Many general liability policies also exclude or sublimit sexual abuse and molestation claims, so ask whether that coverage is included and at what limit.

How to prove coverage to HHSC each year

Licensed and registered operations must verify their liability insurance every year by the anniversary of the date their permit was issued. HHSC s Form 2962 instructions give two ways to do it: complete the verification in your online Child Care Licensing account, or mail Form 2962 with a copy of your certificate of insurance, showing the start and expiration dates, to your local Child Care Regulation office.

HB 2789 removed the annual filing for listed family homes, according to HHSC s guidance letter. Listed homes must still keep $100,000 of coverage or follow the parent-notice process below. Centers must also keep proof of current coverage, or of the parent notices, in their records at the center.

If you cannot get daycare insurance

Texas is unusual: the statute lets an operation go without the required coverage if it cannot obtain it for financial reasons, cannot find an insurer willing to write a policy or has exhausted its policy limits. This does not shield you from paying for your own negligence, and the conditions are strict:

• Tell every parent in writing that you do not carry liability insurance before you admit their child.
• If you drop coverage you previously had, notify parents within 14 days of stopping, according to HHSC s minimum standards for licensed and registered homes.
• Notify HHSC and give the reason. Form 2962 asks you to choose financial reasons, no available underwriter or exhausted limits.
• Keep the signed notices on file. HHSC s optional Attachment A to Form 2962 is a parent acknowledgment form.
• Letting a policy lapse without following these steps is a different matter: section 42.049 makes failure to maintain required coverage grounds for suspending or revoking a license.

Workers t require

The Texas Department of Insurance says most private employers in Texas are not required to carry workers t covered. Because staff lift children and work outdoors, some providers buy it anyway.

If you transport children, the liability policy HHSC asks about is not auto insurance. Vehicles owned by the business need commercial auto, and hired and non-owned auto coverage fills the gap when staff drive their own cars for the daycare. Centers usually also need commercial property or a business owner s policy, and in-home providers should confirm in writing whether their homeowners insurer allows the business.

Why Texas daycare insurance is harder to buy

Cost and availability are now the bigger problem than the legal minimum. KERA reported in October 2026 that the president of the Texas Licensed Child Care Association told lawmakers his liability insurance had gone from $30,000 to $90,000 a year in two years for four centers. An insurance agent quoted in the same report said only two traditional insurers remain in the Texas child-care market, after many left as states gave survivors of childhood sexual abuse more time to sue.

More providers are now placed with surplus lines insurers, which take risks standard carriers decline. Their terms vary, so read the abuse and molestation section and the exclusions closely.

How to meet the requirement without overpaying

The steps that help most:

• Start with the right permit type. Your operation type sets your inspection and proof rules, and insurers price centers and homes differently.
• Buy at least $100,000 per occurrence, then match any higher limit your lease or contracts require rather than guessing.
• Ask for abuse and molestation coverage with its own limit, in writing, before you compare prices.
• Document safety practices insurers ask about: staff background checks, ratios, playground inspections and incident reports.
• Set a calendar reminder for your permit anniversary so the verification never lapses.
• Compare several insurers, including surplus lines markets. A broker such as Florin can compare quotes from several insurers for the same coverage.