1. Forms
2. DL
3. DL-24-17

What the form is

The DL 24 17 Home Day Care Coverage endorsement is designed to be added to a Dwelling Policy (like the DL 24 01) or potentially other personal liability policies to provide liability coverage for an insured who operates a home day care business on their residence premises. It modifies the standard policy, which typically excludes or limits coverage for business pursuits conducted at home.

Classes of business it applies to

This endorsement is specifically for individuals who run a small-scale day care service in their own home. This could include caring for a few children on a regular basis. For example, if an insured, Paula, looks after two children in her home for a fee while their parents are at work, this endorsement would be necessary to cover potential liability arising from those day care operations.

Special considerations

• Abuse Exclusion: A critical aspect of this endorsement is that it explicitly excludes coverage for liability or medical expenses arising out of physical or mental abuse, including sexual abuse or corporal punishment. This is a significant limitation that insureds must understand.
• Annual Aggregate Limit: The limit of liability stated for this Home Day Care Coverage is an annual aggregate limit. This means that the total amount the insurer will pay for all claims related to the home day care services during a single policy year cannot exceed this limit. If a claim is paid, the available limit for the rest of that policy year is reduced by the amount of that claim. For instance, if Paula has a $100,000 aggregate limit and a $30,000 claim is paid, she only has $70,000 in coverage remaining for any subsequent day care related claims during that policy year.
• Scope of Operation: Insurance company manual rules often provide rating for a limited number of children (e.g., one to three persons other than the insured's own children). For larger day care operations, the insurance company has discretion in determining eligibility and the applicable premium.

Key information for agents and underwriters

• Risk Assessment: Underwriters need to carefully assess the scope of the home day care operation, including the number of children cared for, their ages, the hours of operation, safety measures in place (e.g., fenced play areas, smoke detectors, first aid training), and any prior loss history.
• Communicate Limitations: Agents must clearly explain the abuse exclusion and the annual aggregate limit to the insured. This ensures the insured understands the extent and limitations of the coverage.
• Pricing: Rating for this endorsement will depend on the perceived risk, including the number of children. Companies may have specific guidelines for exposures exceeding a certain number of children.
• Coverage Gaps: Given the abuse exclusion, agents should advise insureds to explore other risk management strategies or potentially specialized commercial insurance if available and appropriate for their scale of operation, although this endorsement is often the primary solution for small, home-based day cares under a personal lines policy.