Episode 185: The Most Effective Strategies for Navigating Insurance Hurdles in Child Care Programs

In this podcast episode, Kate and Carrie explore the difficulties childcare programs in Texas face in securing insurance. They discuss how weather-related damages, lawsuits, and increased scrutiny from insurers contribute to these challenges. The speakers emphasize the importance of childcare directors taking proactive steps to mitigate risks, such as showcasing safety measures and considering lease adjustments, to help reduce insurance costs and navigate the shrinking pool of coverage options. They suggest that directors stay informed and seek professional advice to better manage their insurance issues.

Transcript

Marie (00:00:01) - Welcome to childcare conversations with Kate and Carrie.

Kate (00:00:06) - Right now as we are recording this. It is really cold in Texas and the last time it was really cold, we had a lot of programs that ended up with water damage, frozen pipes and well, it's kind of played havoc with insurance carry. So tell us a little bit about what's going on with insurance and child care. Uh, part of the reasons why. Um, just so that, you know, Carrie is not an insurance expert,

Carrie (00:00:45) - No, I was an insurance agent over a decade ago, so it's been a very long. Time since I've been in insurance agent. So I have enough information to be a little bit dangerous. But I'm not breaking any fiduciary responsibilities by having this conversation. So you may have noticed or you may not have, that. It's getting harder to get insurance for child care programs in the state of Texas. Um, we went from having five carriers who provided insurance to child care programs in Texas to now I think we're down to two.

Carrie (00:01:19) - That's my understanding. Um, so if your insurance is due sometime in the next six months, you need to call your insurance agent today and start them looking, because it taking three months is what I heard two months ago, is that it was taking three months to find insurance. And this is just going to get worse and worse. But why is all the why are they all leaving the field? Because like, we're not a high risk profession, right?

Kate (00:01:54) - Well are we? I mean, a lot of what's happening, I would say it's kind of out of our control.

Carrie (00:02:01) - Yeah. So we're not we're not construction. We're not meatpacking. We're not restaurants. Right? We don't have those levels of exposure, and they're still getting insurance, and we're not. So let's talk a little bit about why. So first, Kate, um, you were the first one who told me about seeing the ads from the lawyers. So why don't you tell people about that? Because maybe they don't know about the ads from the lawyers.

Kate (00:02:30) - Yeah. So there have been ads, you know, about from lawyers about making sure that you're getting your building claims and that there are property owners that are not wanting to submit the, the, the building, um, claims for everything that's happened in the last 3 to 5 years, depending on where you are in the state of Texas, but really across the country, because these weather abnormalities are hitting everybody. Right? Nobody is, um, immune to unexpected weather.

Carrie (00:03:12) - Um, so we've had two hurricanes. Um, we've had, I don't know how many tornadoes.

Kate (00:03:14) - A few dozen floods, depending on what part of the state. Yeah.

Carrie (00:03:20) - And so Snowpocalypse caused a lot of flood damage because anybody who had sprinkler systems, the sprinkler systems burst because they're not insulated for temperatures in the single digits. So they burst. And even people who just had regular in the wall plumbing, those burst. Okay. So that's one of the the lawyer things that we saw. But the other one was the people soliciting to sue childcare centers.

Carrie (00:03:50) - Was your child hurt at a daycare center? Call this one 800 number and will take your case on contingency. Um, and we know for a fact that there's two national law firms that are doing that, and they're not advertising everywhere. But if there's a child focused magazine in your state or in your region, I bet you there's an ad in there and parent focused podcasts, they're advertising there, and they're advertising even on TV shows that are parent focused. So there are lawyers out there going, hey, all the child care centers are insured for at least $300,000. This kid got two stitches in their head. I bet we can get 5 to 10 grand out of the school for those two stitches, which they can because of the way that the insurance companies have been responding to those lawsuits. So they've been like, we know how much it's going to cost to defend a case in court. We're just going to write a check.

Kate (00:04:58) - Yeah and so as a result All of these attorneys. It means that now you as a child care director, even if you're not the owner, is the director.

Kate (00:05:09) - This still affects you. Everything that happens to the budget will come back eventually and and touch you, because all of a sudden, your rates may have to go up to meet those needs. Uh, if you have been a director in the last two years, if your rates haven't gone up, I'm gonna scratch my head because food costs, gas costs, uh, utility expenses, and now insurance, everything is going up. So if you haven't already raised your rates, please, please, please have a discussion with your owner because you don't want your owner getting mad at you because all of a sudden you're not full and they're noticing it. You know, when you're full, they may not notice it as much, but it's still going to come back to bite you even if you are not the owner. So, uh, get yourself educated, talk to your own insurance company. Um, if you are one of those folks who use one of the big name companies, and you've just kind of used the same guy

Carrie (00:06:19) - Insurance, farmers insurance is no longer writing insurance for child care anywhere in the country, not just Texas. They're not doing it anywhere.

Kate (00:06:29) - Yeah. So so that's.

Carrie (00:06:31) - that is what she means by big name

Kate (00:06:32) - Yeah. I was trying not to call them all. I'm gonna drop.

Carrie (00:06:37) - State Farm and farmers, because those are the two really large carriers that have left the industry because everybody's familiar with them, because we've seen 100 ads over our lifetime. Well, probably a thousand ads for both of those over the course of our lifetime.

Kate (00:06:54) - Well, so I want us to I do want to make a suggestion with that. If you know that you have homeowner's insurance, car insurance, other insurance with those major folks, think about leaving and tell them the reason you're leaving. Um, just leaving and not telling them why doesn't help them go, oh, this is impacted us more than we we expected. Uh, same with your parents. This is a, um, kind of a backwards opportunity for advocacy, but it is about making a statement.

Kate (00:07:25) - And I'm not saying leave one insurance company to another one. And, you know, make your personal insurance be astronomical. But if you're talking the difference of just maybe a couple of bucks a month, you know, go out and shop insurance, a lot of us don't shop insurance regularly. Something drastic has to happen either a drastic increase, um, adding a new vehicle, a new home, taking off a vehicle. Um, I know that personally. One of the things that was really interesting for me when it came to that, and it's kind of a side conversation, but I want you to think about it, is when my young adult children got over the age of 25, it was actually cheaper for them to have their own policies than it was for them to stay on mine.

Carrie (00:08:14) - I thought it was at 21.

Kate (00:08:16) - Anyway, in our house we noticed a huge difference at 25. Like there was a little difference at 21, but you know, not a lot. It also depends on whether or not you've got boys or girls.

Kate (00:08:26) - So yeah.

Carrie (00:08:27) - So I'm saying if it's six months till your renewal, start talking to your agent. What is what happens if you're lucky and you're in one of the two companies that is writing paper here in Texas, by the way, that's the phrase writing paper. I don't I don't know why. Um, but I'm also hearing that people are in some cases, their insurance is doubling, tripling 10 to 30% increase in that is just expect at somewhere between 10 and 30%. But it might double in one case. Um, this the an industry expert told me that someone she was right or told everybody because I heard it on a podcast. Um, that one of her clients the to get insurance continued insurance. It went up $20,000 a year. So that's two kids full time enrollment. So you have to enroll two more kids just to pay for the insurance increase.

Kate (00:09:35) - So that's what I mean by the increase.

Carrie (00:09:38) - So why are they increasing. We talked about why companies are leaving. But here's the thing that is relatively new.

Carrie (00:09:47) - It's been happening in the past few years. They asked to see your licensing history. They want to see all of your licensing reports. Why are they doing that okay. Why would they want that?

Kate (00:09:59) - Well, are you a risk? So, you know, I mean, this is it's pretty simple, right? It's like, are you a risk? So if you've had minimal violations and they were pretty silly, you're probably safe. But if you've had any violation that's a a major safety or health and safety or you've had to, um, make reports. Um, even if you did self-reporting, um, insurance companies are looking for that. They also, believe it or not, insurance companies do their due diligence, so they will read your reviews online. They will look at your website. They can, you know, they can ask whatever they want. So that also means that they can ask for your staff training. They want to know what you're doing to mitigate the risk for them.

Carrie (00:10:52) - Yeah.

Carrie (00:10:53) - So that's 100% true. And so what I would suggest is that if you well, whenever you're renewing, whether you're renewing, what's the same company or you're getting a new agent, you need to create a packet. That is this is why we're awesome. And you need to insure us and not charge us $30,000 a year. And so it needs to have here's our standard operating procedures. Here's our parent handbook, our staff handbook, and highlight the things that are relevant to, um their risk. So how are you handling accidents and injuries. How are you ensuring that the name to face is happening every time a teacher goes through a door? Um, and that they're doing headcounts multiple times during the morning because sometimes parents don't sign their kids in.

Carrie (00:11:49) - Your app doesn't work properly, and they need to be physically counting the children multiple times during the day. That needs to be in your application packet.

Kate (00:11:58) - So here's another opportunity to think about, especially if you're looking to save money. Um, have some conversations with your landlords and have a conversation with even your insurance company to find out if that is part of the reason, because it might be a lot cheaper to pay more at the property level.

Kate (00:12:20) - So maybe increase your rent a little so that you can get some changes in your lease, where all of a sudden now they are going to pay if there's a snowpocalypse again, and they're going to pay for all of the flooding damage on their own property insurance, um, if you are in a strip center or you have a landlord who has multiple properties, you know, reach out to some of the other businesses that may or may not have been affected. Restaurants, um, sometimes even, you know, karate studios and other similar businesses, um, you might find out that their lease is read different than your lease. So if you don't have an attorney who's helping you with your leases, this is a good time to try to find one of those and then have that discussion. Because, again, a lot of these companies were so badly hit that they really are looking at the property piece. So there is the safety piece, but there's also that property piece. And so in addition to all your standard operating procedures, go back and take a look at your lease and see if you can't make some adjustments with your landlord.

Carrie (00:13:32) - That's a great idea. And then something else to add to your little packet that you're going to submit with your application. Put in your weather mitigation policies and procedures. So anytime there's a forecast that the temperature is going to get to 35 between when you close your doors one day and when you open the next time you're going to open them. What are you doing to make sure that the plumbing doesn't burst? What are you doing if there is a public, do you have a radio or a computer alert that goes when there's a flooding alert or when there's a fire alert in your area? And then what are the policies that you do once those notifications come through on a radio or on your computer telling you there is a flash flood warning, don't wait for the flash flood watch when there is a warning, what are the things you're going to do? I owned a whole bunch of sandbags that I would move from center to center based on who was at risk of flooding, because it's not always all of your programs.

Carrie (00:14:42) - So having sandbags, having what? We can't do a whole lot about fire except for having the fire suppression system. And if we have the fire suppression system, then we have to worry about the freezing. So.

Kate (00:14:54) - Well, okay, so let's say you were a a facility that got stuck. With some of that damage when you have the. When you were when you had it redone, did you put any additional insulation in? Did you put any of those leak detection systems? What kind of things did you also put in again, make that known. Um, I've worked with some businesses that have put in all kinds of leak detection systems to basically identify, you know, if there's a water leak. And as a result, although it was an upfront investment, it's been hugely beneficial to them from a reduce their overall expense liability. And this can be simple. This doesn't have to be you know, it can be something that, uh, works with your Wi-Fi system, uh, communicates to the landlord, communicates to you depending on, you know, your relationship with your property owner.

Kate (00:15:54) - So do that investigation, do that research, find out what options, um, are out there. Because if you had something that could immediately turn off water at the street, if there was a start to be a leak,

Carrie (00:16:12) - Your, um, your insurance agent will. Thank you.

Kate (00:16:13) - Yeah. Your water damage will be happy. Um, now, there's only so much you can do when you know that the the weather is about to freeze, right? We are not in a situation. We're not a part of the country where we traditionally drainpipes put in antifreeze, all of that stuff. And that's probably a little more than what you want to do, but you at least need to know what concepts and what's available. So always ask. So when you go to professional association conferences and you've heard Carrie and I talked before about, you need to go to these conferences and retreats, ask the questions of the professionals, whether it's, you know, um, oh, what was that guy who, um, active shooter training, you know, ask him, does he know if anybody was able to reduce their insurance liability because the staff went through active shooter training? You know, it should.

Kate (00:17:11) - Yes. Talk to the insurance agents and ask the insurance agents. What can you do from a building or lease standpoint to reduce your your cost? Um, so those are some ideas.

Carrie (00:17:25) - Yeah. So and I'm going to circle back to the licensing side. So if you have one of the if you have a situation where a kid was left unattended, if you don't notify licensing and later on somebody finds out, nobody's going to insure you.

Kate (00:17:44) - Ends up on social media.

Carrie (00:17:45) - Yeah. I'm not saying do not do the mandatory reporting. I'm saying do the mandatory reporting and then put in writing to put into your next renewal packet what happened and what you did to prevent that thing from happening again. And if you have a licensing rep who is very interested in finding multiple citations and they will stay in your building for 11 hours, make sure that you know what things are real and what aren't and fight any citations that are bogus. For instance, we talked about it on another podcast episode.

Carrie (00:18:29) - One of our centers, um, was cited for having dangerous animals, and they were like, what do I do, Carrie? And I was like, you fight that citation because the dangerous animal was a lamb, which is the poster child for calm animal, not dangerous. And so it was a lamb and a you, I think, I don't know, it was sheep and it was 1 or 2 of them. That's not a dangerous animal that that is not a Rottweiler. Um, it's not a polar bear. Like, this is not a dangerous animal. And so I had I was like, you have to fight that citation, because if they didn't and I'm an insurance agent, insurance underwriter looking at that facility, do I want to insure a program that allows the children access to dangerous animals? No, I don't I'm going to decline coverage on that building. And it doesn't matter that you say the dangerous animal was a sheep there like you let one dangerous animal in. Pretty soon there's going to be rhinoceros and hippo bottoms and polar bears.

Carrie (00:19:42) - It's going to be it's going to be a huge problem. So if there is a licensing citation that you do not agree with, you need to be more aggressive in appealing those citations because it could mean that you can't get insurance. And if you can't get insurance, every parent who is currently enrolled and every person who comes by for a tour has to be notified that you don't have insurance. And are they going to be willing to stay with you or enroll with you? If you have told them you have no insurance, I think it's going to be unlikely. Yeah.

Kate (00:20:22) - All right. So hopefully we have given you something to think about. I know we've given you a whole list of to do's, so six months at least before you're due for renewal, make sure that you're shopping. Double check if you are getting invoices, even if you're not up for renewal or a whole new plan, but you're making payments, double check to make sure those payments haven't automatically gone up. Ask. Meet with your landlord.

Kate (00:20:49) - Talk about your lease. Um. Traditionally, what happens is the landlords are responsible for the exterior of the building, and you're responsible for the interior of the building. Um, something like fire, uh, plumbing, all of that kind of goes wishy washy depending on the landlord or their first time landlord. Do they have lots of property? Um, how to the letter of the law? Do they want to be. So, um, this is your opportunity to work with that. Make sure your standard operating procedures, your parent handbook, make sure everything is up to date. Fight what you need to fight related to minimum standards inspections. Carrie final to do to think thought. How would you like to wrap up today?

Carrie (00:21:33) - Well I'm going to say final thought is make sure you're subscribed or following this podcast because we're going to be bringing on an insurance agent to have another conversation about this. Like I said, I'm not a current agent. Haven't been one in a long time. We need to bring somebody in who is working in the industry right now and who is working in the industry related to child care, because if they insure homes, um, that's not so much what we're looking at.

Carrie (00:22:03) - And next step is go pull out your policy right now, find out what the expiration date is. And this has now become the number one thing on your to do list. If that date is within the next six months. That's number one.

Kate (00:22:19) - If you've got any questions reach out to us Carrie@Texas Director.Org or Kate@TexasDirector.org. And we will be happy to kind of put you in connection with, uh, the folks that we know and again, never any promises. This is not what we do for a living. And we hope that you share, um, our episode. Leave a review. Some places you have to listen to, like at least five episodes. So go listen to some more. Um, we would love to have you join us. Subscribe and stay warm.

Marie (00:22:54) - Thank you for listening to Child Care Conversations with Kate and Kerry. Want to learn more? Check out our website at Texas Director. Org and if you've learned anything today, leave us a comment below and share the show.