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. 

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

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“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.”

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In a recent claim in North Carolina, an unlicensed home-basedchildcare facility did not have insurance when a toddler in itscare pulled a hot crockpot onto himself, causing severe burns. Theinjured child's mother is petitioning the state to require allchildcare centers to carry insurance, Smith says. 

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“There is a need for these programs to be appropriately insuredand licensed and inspected,” she says. “At the end of the day, theparents are the ones who pay the price if you don't have this. Whenparents understand that providers are not insured and that theliability is all theirs, then I think something might happen [onthe legislative front].”

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And Smith's advice for producers? “If I were an insurance agentselling homeowners policies I would ask, 'Are you doing anychildcare in your home?'” She points out that some unlicensed,home-based childcare facilities may not see themselves as beingchildcare providers—and not realize the risks they're taking on.“An agent needs to frame the question the right way: 'Are youbabysitting a few kids after school every day?'”  

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