Times are fiscally tight in the for-profit world of childcare aswell, and insurance is among the first line items that childcareproviders think they can drop—and an unregulated childcare facilityis able to do so without any state government intervention, saysLinda Smith, executive director of the National Association ofChild Care Resource & Referral Agencies, in Arlington, Va.,which works with more than 600 state and local childcare resourceand referral agencies nationwide. 

Indeed, unregulated childcare across the country is puttingpressure on the cost of childcare inside the regulated system,Smith says. 

“In order to compete with all the unregulated childcare centers,regulated centers are having to keep their prices down. But thatmeans no investments in equipment and training and all the elementsthat make a good program,” Smith says. “Many of them also are notbuying insurance for that reason. Depending on the state, insuranceis most likely not required, so it's up to the individual owner tobuy liability. If they're not registered, they aren't doingthat.”