Texas Home Daycare Insurance Requirements: Liability Coverage Explained

The $300,000 Minimum Coverage Rule

Texas requires registered and licensed child-care homes to carry liability insurance with a minimum of $300,000 in bodily injury coverage per occurrence. This requirement comes from Section 42.049 of the Texas Human Resources Code, and your proof of coverage must be on file before HHSC issues your permit.

Standard homeowner's insurance does not cover commercial child care activities — running a daycare from your home is a business use, and most homeowner's policies explicitly exclude business liability. You need a separate child care liability policy or a commercial general liability rider that specifically covers injuries to children in your care.

The policy must name the child-care home operation and cover bodily injury claims. Most providers purchase coverage through specialty insurers that focus on child care operations. Annual premiums for a home-based daycare typically range from $400 to $1,200 depending on your capacity, location, and coverage limits.

The Waiver Option

If you cannot obtain liability insurance — either because no insurer will write a policy for your situation or because the premiums are financially prohibitive — Texas law allows an alternative. You can file a written parental notification form with HHSC indicating that your operation does not carry the $300,000 minimum coverage.

This isn't a quiet opt-out. The waiver requires you to notify every parent in writing that your home daycare does not carry liability insurance. Parents must sign and date an acknowledgment, and these signed forms must be kept on file at the home for inspection. Every new enrollment triggers a new notification and signed acknowledgment.

The waiver doesn't provide insurance — it simply allows you to operate without a policy. Without coverage, you bear the financial risk of covered claims, and the waiver does not change the disclosure requirements.

Listed Family Homes Are Exempt

If you operate a listed family home under 26 TAC Chapter 742 (caring for up to 3 unrelated children), you're exempt from the liability insurance requirement. The state doesn't mandate coverage for listed homes, though carrying a policy is still a practical safeguard.

The exemption applies only to the listing category. The moment you move to a registered or licensed permit — because you want to care for more than 3 unrelated children — the $300,000 coverage requirement kicks in.

What Your Policy Should Actually Cover

Beyond the state minimum, providers should understand what a child care liability policy typically includes and excludes:

Covered: Injuries to children during care (slips, falls, playground accidents), allegations of negligence in supervision, property damage caused by the operation, and legal defense costs for covered claims.

Typically excluded: Intentional acts, abuse or molestation (requires a separate abuse/molestation rider, which most child care policies include), vehicle-related injuries during transport (requires a separate commercial auto policy), and professional liability for educational advice.

When shopping for a policy, ask specifically about abuse and molestation coverage — most specialty child care insurers include it, but the limits and terms vary. Confirm the policy's limits and terms with the insurer; HHSC's proof requirement concerns the applicable coverage.

Getting Insurance Before Your Inspection

Your proof of insurance must be available at your pre-licensing inspection. The licensing analyst will check for a current certificate showing at least $300,000 per occurrence in bodily injury coverage. If you're filing the waiver instead, have the parental notification forms ready.

The Texas Home Daycare Licensing Guide covers insurance alongside the full pre-licensing checklist — including what inspectors actually look for and how to sequence the insurance purchase alongside background checks, training, and facility preparation.

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