Beware of “Daycare” Traps in Your Homeowner’s Policy

Homeowner’s PolicyMany families in Nashua, New Hampshire earn a few extra dollars providing childcare in their homes to a friend’s child or perhaps for a grandchild. The pay for this work is often minimal for the value of the services performed. However, if there is an injury, despite what you may assume, your homeowner’s insurance policy may not provide you with any financial coverage. In fact, the insurance company will argue this is “child care services.” This little known policy exclusion can expose you to being personally liable for these injuries in your home/apartment and you can potentially owe thousands of dollars in damages. Again, many people in New Hampshire assume that because somebody is injured in their home that their homeowner’s or renter’s insurance coverage will take care of it. This is, in fact, not true in some childcare instances.

For example, your adult daughter drops off your 3-year old granddaughter as she has returned to work for the last several months and you are watching your granddaughter each work day. If your granddaughter was injured, your renter’s or homeowner’s coverage (despite providing for coverage for injuries to others) is likely inapplicable because of exclusion language for “providing child care on a regular basis.” Most people believe that this policy language was only meant to cover licensed daycare facilities, babysitting multiple children, or a formalized daycare arrangement. Several courts around the country have upheld a denial of insurance coverage for young children who were receiving “babysitting” by a friend /relative who was only receiving token payments and the child was the only person being watched. This “child care services” exclusion may now be a standard provision in State Farm Homeowner’s Insurance policies.

In conclusion, you should check with your insurance agent if you are more than “occasionally” watching any child in your home; this is regardless of whether you are being compensated or not. There may be additional coverage you can purchase. If you are in this unfortunate situation and your insurance company denies the claim, you should consult a lawyer as there may be a means to challenge it. However, checking with your Nashua insurance agent is the best precaution so as to avoid this unfortunate situation which endangers your home and other assets.

This blog is intended for informational use only. The information contained herein should not be construed as offering legal advice or a legal opinion.