Tennessee Daycare Insurance Requirements

Insurance is one of the requirements that TDHS verifies during the pre-licensure walk-throughs and can check during any unannounced inspection. Letting your policy lapse after licensure is a compliance violation that can trigger corrective action.

What the State Requires

Tennessee licensing rules require licensed family and group child care homes to carry general liability and sexual abuse and molestation coverage. If you transport children in any vehicle, you also need automobile liability and medical payment coverage.

Tennessee's licensing rules specify minimum coverage amounts for family and group homes:

• General liability: $300,000 per occurrence and $300,000 general aggregate
• Sexual abuse and molestation coverage: $100,000 per occurrence and $300,000 aggregate
• Automobile liability: $300,000 combined single limit for family and group homes if transporting children
• Medical payments: $5,000 for injuries to children from the agency's operation, plus $5,000 for children transported in agency vehicles

Your Licensing Consultant may ask to see the declarations page of your policy during inspections. Keep a current copy in your on-site files.

What Most Providers Add

Professional liability (errors and omissions) — may be bundled with general liability, depending on the policy.

Property damage — covers damage to your home caused by the daycare operation. Standard homeowner's insurance policies often exclude or limit coverage for business use of the home.

Workers' compensation — required in Tennessee if you have five or more employees. Most family child care homes operate with one or two caregivers and fall below the threshold, but group homes with three educators may trigger it.

Cost Range

Annual premiums for a home daycare general liability policy typically fall between $800 and $2,500, depending on:

• Licensed capacity
• Location (urban vs. rural, county risk profile)
• Whether you add abuse and molestation coverage
• Claims history
• Whether you transport children

Policies can be paid monthly or annually. Annual payment usually gets a 5–10% discount.

Landlord Requirements

Under recent Tennessee legislation, landlords cannot refuse tenancy or evict a tenant solely because they plan to operate a licensed home child care facility. However, landlords can legally require:

• Written notice that you will operate a daycare
• Proof of liability insurance naming the landlord as an additional insured
• Restrictions on unapproved structural modifications to the property

Adding a landlord as an additional insured on your policy is standard practice and most carriers handle the endorsement at no extra cost or a nominal fee. Get this done before you sign a lease or submit your licensing application — your landlord's cooperation can affect your zoning clearance timeline.

Homeowner's Insurance Warning

A standard homeowner's insurance policy almost certainly does not cover a home-based business. If a child is injured at your daycare and you file a claim under your homeowner's policy, the carrier will likely deny it because you were operating a commercial activity. You need a separate business liability policy or a specific endorsement on your homeowner's policy.

Contact your homeowner's insurance carrier before you begin the licensing process. Some carriers will add a home business endorsement. Others require a separate commercial policy. A few will cancel your homeowner's coverage entirely if you operate a daycare — better to know that before you are mid-process.

The Tennessee Home Daycare Licensing Guide includes a checklist of the insurance coverages TDHS expects to see during inspections and the questions to ask your broker to make sure your policy actually covers what you are doing.

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