Ask Your Peers  In Home Daycare/Building Coverage 

I need a market for an in home day care. Additionally, their homeowners will not add the "Day Care Endorsement" due to the creation of an LLC for the day care. Is leaving the building covered under dwelling coverage a big exposure assuming a day care is operated? Would it be better covered under a commercial policy?

Hi Jeffrey,

Thank you for using CompleteMarkets! Your best bet is to chat with All Risks, Ltd. about your insured. They have a Day Care/Preschool program that covers In-home day care centers. They offer GL, Property, Crime, Inland Marine, and E&O. They do have monoline property and GL available as well. Here is a link to their contact from. 

Please let me know how this works out for you!

Thank you,
Erin

Ask the HO carrier if they would still insure the home if you carve out the daycare operation and write a commercial GL policy. Honestly, that is the best way to ensure the most comprehensive coverage for the customer, anyway. With a commercial policy you can add Abuse & Molestation coverage, which is often excluded on an HO policy. It also further separates the individuals from the business, which was surely their purpose in forming an LLC in the first place.

Genny, thank you for the reply. I am trying to write a CGL, but because the HO carrier will not add the day care endorsement due to the LLC, I am concerned about something happening in the day care that would destroy the home. Would the HO carrier dispute the dwelling/building coverage due to increased risk and commercial operations? I'm sure his policy states a claim could be denied due to increased risk or commercial operations. It also could be clearly excluded. His current personal lines agent told him most likely HO carrier would rebuild and then sue the LLC. That is certainly a pleasurable response for the homeowner to hear.

Hi Jeffrey,

Markel has an excellent daycare product which will cover the GL & BPP. As for the dwelling you may want to look for another carrier that will exclude the liability portion with proof of commercial coverage, that is if the current carrier won't do it. Worst case scenario you write a home policy through Lloyds or Lexington and they should have no problem with it.

Good Luck!

I'm not sure that the HO agent is correct, and here's why - I had an HO customer with AIG, who also did in-home culinary classes. The culinary instruction business was an LLC. AIG agreed to insure the home, if we obtained a separate CGL for the in-home business. AIG was completely unconcerned about the property exposure, just the CGL. We provided COI and AIG was pleased.

Based on what the agent is telling you, had my customer started a fire in the home during the instruction, then AIG may pay the home damage claim but would then sue the LLC. I find that to be an unlikely scenario but, if it happened, the CGL form should respond under the Fire Legal Liability coverage part.

See if the customer will let you take over the personal insurance. They should have both with the same agent anyway, as it is the best way for you to ensure no gaps.

Yes, that is what I suggested. Having a lease between them personally and the LLC for the Fire/Legal coverage.

I discussed with an underwriter who said they could do the liability and contents (No building coverage). E-mail me for an application [email protected]

Kenneth Kukral, CIC
www.intlxs.com

Kenneth,

Thank you for taking the time to reply. The building coverage is the main issue and the problem to solve. I have markets for the liability and contents. Having the HO not acknowledge the day care and something going wrong in the day care that would destroy the home is my concern.

Keep in mind that they would include "Damage to rented premises" of $100,000 (possibly endorsed higher)... so this would pick up if they caused the fire or water damage and the homeowners carrier was balking at paying.... wouldn't this solve the problem?

Kenneth Kukral, CIC
www.intlxs.com

I think so as long as it was included. Told the prospect needs to have a lease between himself and LLC too.