Essential Insurance Types Every Daycare Business Needs for Complete Protection

If you run a daycare in Arizona, you are managing one of the most complex risk environments in the small business world. You aren’t just watching children or elders; you are navigating strict Arizona Department of Health Services (ADHS) regulations, managing a high-turnover workforce, and acting as the guardian for the most precious members of our community.

In my decades of experience as an insurance broker in Phoenix, I have seen too many daycare owners make the same fatal mistake: they buy a “standard” business policy online, thinking they are covered. They don’t realize that standard policies often exclude the very things that get daycares sued—like professional supervision errors, abuse allegations, or data breaches.

At PJO Insurance Brokerage, we don’t just sell policies; we build risk management programs. We’ve created this guide that covers the exact insurance architecture you need to stay compliant, protected, and open for business.

Part 1: The Arizona “Must-Haves” (State Requirements vs. Reality)

Before we talk about protecting your assets, let’s talk about staying legal. Arizona has strict statutes regarding insurance for care facilities. If your coverage drops below these limits, you risk immediate suspension of your license.

1. General Liability (The Foundation)

• The Statute: According to Arizona Administrative Code R9-5-308, all licensed child care facilities must maintain a minimum of $300,000 in general liability insurance.
• The Reality: While $300k keeps you legal, it rarely keeps you safe. In today’s litigious environment, a single serious injury lawsuit can easily exceed $500,000.
• PJO Recommendation: We rarely write policies for less than $1,000,000 per occurrence / $3,000,000 aggregate.
• What it Covers: Bodily injury (slips, falls), third-party property damage, and legal defense costs.

2. Commercial Auto (More Than Just Vans)

If you transport children or seniors—whether for field trips or daily pick-ups—personal auto insurance will not cover you. You need a Commercial Auto policy that meets A.R.S. Title 28, Chapter 9 requirements.

• The “Hired & Non-Owned” Trap: Do you send staff to the store in their own cars to buy milk? If they get into an accident while “on the clock,” your business can be sued. “Hired & Non-Owned Auto” coverage protects the business when employees drive their own vehicles.

3. Workers’ Compensation (Strictly Enforced)

Arizona is a “strict liability” state for workers’ comp. If you have employees, you must carry it.

• The Risk: In daycares, back injuries (from lifting children or assisting seniors) are the #1 claim. Without this policy, you are personally liable for their medical bills and lost wages.

Part 2: Child Daycare Specifics – Risks You Might Ignore

Caring for children in Arizona presents risks that don’t exist in other states. Standard “off-the-shelf” policies often have exclusions that leave these specific areas exposed.

1. The “Arizona Heat” & Playground Liability

In July, a plastic slide can reach 160°F. Artificial turf can cause second-degree burns in minutes.

• The Regulatory Focus: The Governor’s Workplace Heat Safety Task Force has recently emphasized heat protection protocols. Insurance carriers are following suit, scrutinizing outdoor safety plans more than ever.
• The Coverage Gap: Some budget policies classify burns from playground equipment as “negligence due to lack of supervision” and try to deny the claim.
• The Fix: We ensure your Premises Liability explicitly covers playground injuries and heat-related environmental hazards.

2. Abuse & Molestation (The “Silent” Exclusion)

This is the most uncomfortable conversation, but the most necessary one.

• The Danger: Many standard General Liability policies exclude coverage for abuse and molestation. If a staff member is accused (even falsely), you could be on the hook for hundreds of thousands in legal defense fees.
• The Fix: You must buy this as a specific endorsement (“buy-back”). Never assume it is included.

3. Swimming Pools & Water Features

Did you know that many carriers instantly decline daycares with pools?

• The Solution: If you have a pool, splash pad, or even a decorative fountain, you are a “hard-to-place” risk. PJO has access to specialty markets that will write these policies, provided you meet barrier and gate safety requirements.

Part 3: Adult Day Health Care (Elderly Care)

Adult Day Health Care (ADHC) and senior centers face a completely different liability landscape. You aren’t dealing with playground falls; you are dealing with fragile health conditions and cognitive decline.

1. Elopement Liability (Wandering)

The biggest nightmare for an ADHC is a participant with dementia walking out the front door.

• The Statistics: According to the Alzheimer’s Research Association, 60% of people with dementia will wander. In the Arizona desert, a confused senior wandering outside in summer can suffer fatal heatstroke in less than an hour.
• The Coverage: Your Professional Liability policy must explicitly cover “elopement.” Many standard medical malpractice policies exclude this unless asked.

2. Medication Administration Errors

If your staff assists with medication, you have “medical exposure.”

• The Risk: Giving the wrong dosage or mixing up patients’ meds.
• The Fix: Professional Liability (Errors & Omissions) is non-negotiable here. General Liability covers slips and falls; Professional Liability covers the services you provide (like nursing, feeding assistance, or health monitoring).

3. Fragile Bones & “Failure to Prevent”

A minor bump that wouldn’t hurt a child can break a senior’s hip.

• The Reality: Families often sue not just for the fall, but for “Failure to Prevent Falls.” This requires a policy that covers administrative negligence—allegations that your hiring or training protocols were insufficient.

Part 4: The “PJO Advantage” – Why Arizona Centers Choose Us

There are plenty of websites where you can click a button and get a generic quote. But when your license is on the line, you need a partner, not a robot.

1. We Are Independent (We Shop for YOU)

Captive agents (like State Farm or Allstate) can only sell you one brand. If their rates go up, you’re stuck.

• Our Approach: We are an independent brokerage. We take your profile and shop it across 15+ top-rated carriers simultaneously. We force the insurance companies to compete for your business.

2. We Handle “Hard-to-Place” Risks

Have you been dropped by your carrier? Do you have previous claims? A pool? Operate 24 hours?

• The E&S Market: We have access to “Excess & Surplus” lines—specialty insurance markets that handle high-risk accounts that standard banks reject. We rarely say “no.”

3. Licensing & Audit Support

We know the AZDHS surveyors. We know what they look for on your Certificate of Insurance (COI).

• Speed Matters: When you are being audited, you can’t wait 3 days for a certificate. We prioritize compliance requests to ensure your paperwork is in the inspector’s hand immediately.

4. 2026 Cost Estimates (What to Expect)

While every business is unique, here is what our Arizona clients are typically seeing for premium costs in 2026:

(Note: These are estimates based on standard liability limits. Adding commercial auto or property coverage will affect these rates.)

Ready to “Audit-Proof” Your Facility?

Don’t wait for a renewal notice or an inspector to find a gap in your coverage. Here’s what our clients say:

“Patrick at PJO Insurance has to be the best in the industry. He responds incredibly quickly, only presents solutions and not problems…” — Chris Scheffe [Read review]

“PJO Insurance was able to provide product liability insurance when no one else could…” — Sherrel Heath [Read review]

Contact PJO Insurance Brokerage today. Let us do the shopping for you, so you can focus on the care you provide.

PJO INSURANCE BROKERAGE
Email: patrick@pjobrokerage.com
Website: www.pjobrokerage.com

Arizona Location
4103 East Prickly Pear Trail
Phoenix, Arizona 85050
Office: 480-680-9951

California Location
107 Via Estrada, Unit A
Laguna Woods, California 92637
Office: 949-264-0889

Nevada Location
9850 S Maryland Parkway Suite A-5-262
Las Vegas, Nevada 89183
Office: 702-747-5403