1. Forms
2. FL
3. FL-04-42

What the form is

The FL 04 42 Limited Home Day Care Coverage endorsement is designed to be added to a farm liability policy (such as the FL 00 20 Farm Liability Coverage Form) or potentially other liability policies where applicable. Its primary purpose is to provide liability coverage, including medical payments, for an insured who operates a home-based day care service. This is crucial because standard homeowners or farmowners policies often exclude or severely limit coverage for business pursuits conducted on the premises.

Classes of business it applies to

This endorsement is specifically for individuals or families who run a small-scale day care service out of their home, particularly when their primary liability coverage is through a farm policy.

Real-world example: A farming family decides to supplement their income by having one spouse run a small day care for a few children in their farmhouse. Their standard farm liability policy would likely not cover incidents related to this day care business. By adding the FL 04 42 endorsement, they can gain liability protection for accidents or injuries that might occur to the children in their care or arising from the day care operations.

Special considerations

• Scheduled Endorsement: The endorsement schedule must be completed, likely detailing aspects of the day care operation such as the number of children.
• Coverage for Employees: Coverage applies to services provided by the named insured as well as by their employees involved in the day care.
• Specific Exclusions: The endorsement introduces its own set of exclusions. For example, it typically excludes injuries arising from the ownership, maintenance, or use of draft or saddle animals, aircraft, motor vehicles, motorized cycling vehicles, or watercraft in connection with the day care.
• Business Property: The endorsement may modify limitations on property used in a business, potentially providing broader coverage for the property of the day care operation itself.
• Licensing and Regulations: While the form provides insurance coverage, it does not override or satisfy any state or local licensing or regulatory requirements for operating a day care. The insured is still responsible for meeting all such legal obligations.

Key information for agents and underwriters

• Risk Assessment: Underwriters need to carefully assess the risk associated with the home day care. This includes the number and ages of children, hours of operation, safety measures in place (e.g., fenced play areas, smoke detectors, first aid training), caregiver-to-child ratio, and any prior loss history.
• Premium Impact: Adding this endorsement will result in an additional premium to reflect the increased liability exposure.
• Coverage Gaps: Agents should discuss potential coverage gaps with the insured. For instance, professional liability (errors and omissions in providing care or instruction) is typically not covered by this endorsement. Depending on the scale and nature of the day care, separate professional liability coverage might be advisable.
• Interaction with Base Policy: It's crucial to understand how this endorsement interacts with the terms and conditions of the underlying liability policy (e.g., FL 00 20). The endorsement modifies the base policy but doesn't replace all its terms.
• Ensure Suitability: This endorsement is for limited home day care operations. Larger, more commercial day care centers would typically require a full commercial general liability policy and other specialized business coverages.