Day-Care Providers Have 3 Options on Liability Risks
When it comes to liability insurance, day-care providers are on an honor system that gives them sole responsibility for telling parents about insurance options, according to state and insurance industry officials.
Since 1985, the state has given day-care providers three options: buy liability insurance, become bonded for at least $300,000 or obtain an affidavit from parents stating they are aware of the lack of insurance. Day-care providers are supposed to keep a file of the waivers in their home, a file that is checked once every three years as part of the license renewal process, said Dave Smith, an official of the state Department of Social Services.
The state does not request copies of the half-page affidavit, nor does it provide parents with consumer information about the implications of selecting an uninsured day-care provider, Smith said.
“There is nothing in the regulation that dictates a certain level of explanation,” confirmed Dianne M. Edwards, who supervises day-care licensing in Orange County.
The reality of the liability insurance honor system is being discovered by Jennifer and Kevin Duncan, the parents of a 9-month-old boy who was severely burned in the June 8 fire that killed two other babies at Pat Orozco’s Huntington Beach day-care home.
In a written statement and a brief interview, Jennifer Duncan said neither she nor her husband can recall being asked to sign an affidavit. Orozco, who is hospitalized with burns and was unavailable for comment Friday, decided to use affidavits rather than buy insurance, according to state records.
Jennifer Duncan said the couple’s medical insurance will pay for their son’s hospitalization but not for such anticipated expenses as day care with special medical attention. Those are the kinds of expenses that would have been covered by liability insurance, she said.
“We feel strongly that such insurance must be made a requirement,” Duncan said. “We are incurring costs we never imagined.”
California’s home day-care providers have not embraced the idea of liability insurance.
About 61% of home day-care centers do not carry liability insurance, according to last year’s survey of about 1,000 California day-care providers conducted by the office of the state insurance commissioner. In contrast, about 95% of the state’s day-care centers, or preschools, do have the insurance, the survey said.
There are many reasons cited by home day-care providers who reject insurance. Some believe the insurance is too expensive and others carry a misconception that a homeowner insurance policy will suffice, said Joseph Silverman, president of BMF Marketing Insurance Service Inc., one of the state’s major day-care insurers.
On the average, a day-care liability insurance policy costs about $50 per child per year, Silverman said, but that price is too high for some providers. “By the time they put out their own money for educational materials, toys and food, they don’t have anything left to fork over for insurance,” Silverman said.
Additionally, many day-care providers believe the affidavits will protect them in the event that a parent decides to sue. “That is not the case,” Silverman said. “All the affidavits really do is tell the parents when they sue that the provider has no insurance.”
Those familiar with the insurance industry are skeptical about the idea of requiring liability insurance for all day-care providers.
Silverman said he thinks the state would be better served by spending the money to keep a closer eye on conditions at the state’s 20,000 day-care providers.
