What municipalities and licensing agencies require of childcare providers: licence conditions, subsidy contracts and how to prove you meet them

What the city, county and licensing agency require of a childcare provider

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Government requirements on a childcare provider typically combine the state licence, which in many states requires general liability of $1M per occurrence and $2M aggregate with abuse and molestation coverage, a county or city subsidy contract that adds the public entity as additional insured, professional liability, commercial auto of $1M combined single limit where children are transported, statutory workers' compensation with employers' liability, an umbrella in some contracts, and current fire, health and occupancy approvals.

Reviewed by Michael LaBarbera, Licensed property & casualty agent, Provident Financial Group · Reviewed Oct 11, 2026 Updated Oct 14, 2026

Typical requirements and how to check them
Requirement	What they usually ask for	How to check what you have
Licensing agency: general liability with abuse coverage	Many state licensing rules require general liability of $1M per occurrence and $2M aggregate with sexual abuse and molestation coverage not excluded, with a certificate filed at licensing and renewal; others require the provider to disclose coverage to parents in writing	Dec page limits, the abuse and molestation coverage part and its limits, and the exclusions page; the state's childcare licensing rules state the exact requirement for your licence type.
Subsidy and Head Start contracts: additional insured	The county, city or grantee agency and its officials as additional insureds on general liability, primary and non-contributory, with a waiver of subrogation	An additional insured form that covers the public entity and its individuals, and the waiver endorsement; agencies read the forms, not the certificate box.
Professional liability	$1M per claim for care, supervision, instruction and medication administration	A childcare professional liability coverage part or separate policy.
Commercial auto for transport	$1M combined single limit on vans and buses used to transport children, with the agency as additional insured, drivers listed, and hired and non-owned for staff vehicles	Auto dec page with the vehicles scheduled and the limit; state transport rules often add seat-belt, child-restraint and driver-qualification conditions.
Workers' compensation and employers' liability	Statutory plus employers' liability of $500K or $1M; agencies also check background clearances, which are separate from insurance	Information page of the policy, Part Two limits.
Umbrella where the contract requires	$1M to $3M following form over general liability, abuse coverage, auto and employers' liability on larger subsidy and Head Start contracts	Umbrella dec page and underlying schedule; confirm it follows form over the abuse coverage, which many umbrellas exclude.
Property on the centre and food program equipment	Replacement cost on classroom improvements, kitchen equipment used for the child nutrition program, playground structures and vehicles	Business personal property and tenant improvements limits; outdoor property sub-limits for playgrounds; auto physical damage on the vans.
Occupancy, fire and health approvals	Certificate of occupancy for childcare use, fire inspection, health inspection and food program approval kept current and posted	Not insurance: the approvals themselves. Carriers underwrite on the same inspections, so keep them with the policies.

Requirement

What they usually ask for

How to check what you have

Licensing agency: general liability with abuse coverage

Many state licensing rules require general liability of $1M per occurrence and $2M aggregate with sexual abuse and molestation coverage not excluded, with a certificate filed at licensing and renewal; others require the provider to disclose coverage to parents in writing

Dec page limits, the abuse and molestation coverage part and its limits, and the exclusions page; the state's childcare licensing rules state the exact requirement for your licence type.

Subsidy and Head Start contracts: additional insured

The county, city or grantee agency and its officials as additional insureds on general liability, primary and non-contributory, with a waiver of subrogation

An additional insured form that covers the public entity and its individuals, and the waiver endorsement; agencies read the forms, not the certificate box.

Professional liability

$1M per claim for care, supervision, instruction and medication administration

A childcare professional liability coverage part or separate policy.

Commercial auto for transport

$1M combined single limit on vans and buses used to transport children, with the agency as additional insured, drivers listed, and hired and non-owned for staff vehicles

Auto dec page with the vehicles scheduled and the limit; state transport rules often add seat-belt, child-restraint and driver-qualification conditions.

Workers' compensation and employers' liability

Statutory plus employers' liability of $500K or $1M; agencies also check background clearances, which are separate from insurance

Information page of the policy, Part Two limits.

Umbrella where the contract requires

$1M to $3M following form over general liability, abuse coverage, auto and employers' liability on larger subsidy and Head Start contracts

Umbrella dec page and underlying schedule; confirm it follows form over the abuse coverage, which many umbrellas exclude.

Property on the centre and food program equipment

Replacement cost on classroom improvements, kitchen equipment used for the child nutrition program, playground structures and vehicles

Business personal property and tenant improvements limits; outdoor property sub-limits for playgrounds; auto physical damage on the vans.

Occupancy, fire and health approvals

Certificate of occupancy for childcare use, fire inspection, health inspection and food program approval kept current and posted

Not insurance: the approvals themselves. Carriers underwrite on the same inspections, so keep them with the policies.

Three doors into government

A childcare provider deals with the state licensing agency, which sets the conditions to operate; the county, city or grantee that pays for subsidised care and attaches a contract exhibit; and local offices that issue occupancy, fire and health approvals. Insurance appears in the first two. The licensing rule sets a floor, the contract raises it, and both expect evidence that stays current.

The lines government names for childcare

General liability written on a form without an abuse exclusion, with a dedicated abuse coverage part at a full limit. Professional liability for the care. Additional insured status for the public entity on contracts. Auto for every vehicle that carries children. Workers' compensation for staff. An umbrella on larger contracts, read for whether it follows the abuse layer. Property on the centre and the food program kitchen. And the approvals that make the operation legal.

How to check your policies against the rules and the contract

Read your state's licensing rule for your licence type and compare it to the general liability dec page and the abuse coverage part. Read the subsidy contract exhibit and confirm the additional insured and waiver forms. Confirm professional liability. Check the auto schedule against every vehicle that transports children. Confirm workers' compensation, the umbrella schedule and exclusions, and the property limits for the playground. Keep the approvals with the policies.

Keep the certificate current

Licensing agencies check at renewal and subsidy contracts at each policy renewal. A live certificate link stays current as policies renew and notifies the agency when a line changes, with the official PDF attached, so the licensing file and the contract file match.

Questions people actually ask

Does the state licensing agency require insurance, or only the county contract?

It depends on the state. Several licensed states require liability insurance as a licence condition and others require written disclosure to parents. Subsidy and Head Start contracts add their own exhibit regardless. Check your state's licensing rule for your licence type and treat the contract as the higher bar.

Why does the county want to be an additional insured on a childcare centre's policy?

Because it is paying for care through a subsidy contract and a claim by a subsidised family can name the county. Additional insured status puts your policy in front of the county's.

Our van is used for field trips twice a month. Does it need commercial auto?

Yes. Transporting children for a business is commercial use, personal auto policies exclude it, and both the licensing agency and the contract require a commercial policy with the vehicle scheduled.

Does the umbrella sit over the abuse coverage?

Only if its form says so. Many umbrellas exclude abuse and molestation, so an umbrella can satisfy the contract's liability requirement while the abuse layer stays at the primary limit. Read the umbrella's exclusions.