Very much at home: child care provider Starr DeAngelo. Photo by: Teri Currie

Don’t Try This at Home
As insurance companies retreat from providing homeowner’s policies to in-home child-care providers, caregivers are faced with an impossible choice: Lose your business or lose your home

By Ashley Hahn

It’s naptime at Mrs. D’s 24-Hour Day Care, and Mr. and Mrs. D, as the kids call Don and Starr DeAngelo, find themselves in a lull during their otherwise hectic day at this in-home group day care in Rotterdam.

Don is tattooed, long-haired, bearded and burly, and his wife says he’s an overgrown kid. He has a husky laugh, jokes with his wife, and quietly pops out of the room every 15 minutes to check on the children as they sleep. Starr has an instantly endearing demeanor complimented by her calm, gentle voice. They’re the type of couple who finish each other’s sentences and reserve Saturday nights just for each other. That’s about the only time they have to themselves; from Sunday night through Saturday morning, the DeAngelos devote all of their time to caring for children.

Starr DeAngelo opened her day-care business nine years ago. “My husband still had his job because we needed the medical, so I started doing this by myself and I had three children when I started. Then I got called for more and more children,” she explains, sitting in their cozy kitchen while the children in their care nestle on cots just beyond the doorway in the living room. As the business continually grew, her grown daughter took on the night shift, and three years ago her husband quit his other job to help her full-time. The DeAngelos have had up to 31 children on their roster, rotated in three shifts throughout the day. They can have up to 14 children during first shift—12 full-time and two part-time—up to 12 years old, and they take infants only on the second or third shift so they can give them enough attention.

Many parents prefer family or group day care because their children will be cared for in a home setting. And it truly is homey at the DeAngelos’. They don’t hesitate to consider the families they help as extended family, caring for the children as though they were their own. “If somebody’s going to come and give you their children, that’s a lot of trust,” DeAngelo says as her husband nods. They stay current on complete first-aid and CPR training, and enjoy taking classes to learn more about childhood development.

“You can make a difference in these kids’ lives,” DeAngelo says earnestly. Lots of the families the DeAngelos help are relatively low-income and have child care subsidized through the county. They also have a lot of children who come from single moms, and DeAngelo jokes that Don is frequently on loan as a fix-it man to them. They concentrate on teaching the children the building blocks of early education—from ABCs to good hand-washing skills—but they give them things to look forward to as well, be it daily home-cooked meals or treats on holidays.

“We’re not just doing day care; we’re making sure that if they don’t have supper that night that they had a really good lunch here,” Starr explains. “Seven o’clock starts breakfast and it doesn’t stop until nine o’clock. Ten o’clock is snack. Eleven o’clock is lunch because we have ones that have to catch the bus so they have to eat before they leave. When they get up [from naptime] three o’clock starts snack again, five to five-thirty starts supper, eight o’clock is a snack, and 10 o’clock is the next snack.”

At times the DeAngelos take their generosity to extremes usually reserved for doting grandparents. A high point of the year is Family Day in July, when the DeAngelos put on a big backyard event complete with a huge spread of food, Slushees, horses and animals, and face painting, all for free. “It’s a day for them to come and have fun with their families, that’s what we want,” DeAngelo explains. The end of the summer brings graduation day, complete with powder-blue caps and gowns, an exciting new addition to the ceremony last year. And they go overboard for Christmas, completely decking out the house inside and out. This year the kids each got toy-store gift certificates and stockings. In the past, the DeAngelos often bought gifts for all of the kids and even for some parents who didn’t have someone to buy for them. “Last year we had three presents each—that was 99 presents to wrap just for day care,” says DeAngelo.

But this sweet picture of in-home child care is in jeopardy. In the last year, the DeAngelos lost their homeowner’s insurance as a result of their business and had a near-impossible time finding a new homeowner’s policy plus separate liability coverage for their day care. And they’re not alone. In-home day-care providers are losing their homeowner’s insurance at an alarming rate, and the consequences are grim. Providers are faced with a terrible choice: keeping their home or staying in business, because it’s getting increasingly difficult to have both.

In the past few years, regional child-care resource and referral agencies began noticing that their local providers were experiencing difficulty obtaining liability coverage, and they brought it to the attention of the New York State Child Care Coordinating Council. The council’s legislative committee and the Greater Upstate Law Project, a nonprofit legal resource and advocacy group, presented these problems to the state Legislature’s insurance committees. The committees wanted more evidence that this trend was becoming widespread, so GULP surveyed in-home child-care providers in five New York counties. “We wanted to document the fact that this wasn’t one or two people who had high claims records,” says Susan Antos, staff attorney for GULP. The results, released in a report in October, indicate that family- and group-child-care providers are unable to find an affordable liability policy, and appear to be in increasing danger of losing their homeowner’s insurance coverage, even when the business is covered by a separate liability policy.

There were two lawsuits brought by families whose children were injured at in-home day care in 2000 “that found the homeowner’s insurance company as liable for the child-care business even though the policies had exclusions for the child-care business,” explains Antos. That’s when many New York child-care advocates think the trouble really picked up speed, becoming what Antos sees as “a bit of a stampede” of people losing their homeowner’s insurance.

Although those two suits were specifically tailored to the particular circumstances of each child’s injury, in their wake there’s been a rash of homeowner’s insurance cancellations and nonrenewals. “Even if they have liability insurance they’re still having trouble, which doesn’t make a lot of sense,” says Antos.

This doesn’t add up for Lynda Weismantel, family child-care resource director at the Captial District Child Care Coordinating Council. “Considering the fact that family child-care providers have to have training, and part of the training that they receive is how to manage their environment and make it safe, I don’t really know why they’re being picked on,” she says.

Photo by: Teri Currie

Not all home child-care providers have separate liability insurance for their business, which complicates the issue somewhat. Sometimes providers have not been entirely honest about the nature of their business with their insurance company, and many others are simply unaware that their homeowner’s insurance company does not cover the business. Sometimes “it wasn’t until the claim was placed and an adjuster came out, did [insurance companies] realize there was a business there,” says Wiesmantel. “In the fine print, these policies say, if you’re caring for children for a fee, this doesn’t cover you.” Child-care advocates and resource groups have been trying to drive home that providers need to check precisely what their policies cover.

Antos says many providers believe the small claims they file are being used as a pretense for cancellations or nonrenewals. “Then they find it difficult to get insurance, and they’re told if they weren’t taking care of children they probably wouldn’t have the problem,” she says.

New York requires only non-home-based day-care centers to have liability insurance; it is not required of all of the state’s registered providers, and according to a recent survey done by the Family Child Care Association, 38 percent of respondents had no liability coverage.

But Antos points out that “Some counties make [liability coverage] a condition of getting a contract.” A county will contract with a provider to take a certain number of children at a certain rate and will issue contracts only if providers have insurance. Many New York counties, including Albany, require contracts in order to have any governmental assistance through subsidies, which the county administers. But, she points out, “it really varies from county to county.” New York state’s child-care system is administered locally, so there is not one set program with one set of rules for providers or insurance companies to go by.

“Oftentimes, child-care providers are very low-income, so they see insurance as something that they can’t afford,” Antos says. “But it obviously is very dangerous, both for them—because if there was an accident and they got sued, they’d have a judgment around their neck for 20 years—and for the children that they care for.”

The Family Child Care Association of New York State worked with agents at Marshall & Sterling to set up a group liability policy for family child-care providers for the association’s members. About 400 of its providers are currently covered through this program.

“We have more or less solved their problem with respect to commercial liability insurance,” says Harry Bucciferro, senior account executive for Marshall & Sterling Upstate. “It really wasn’t largely available, or at least it was unaffordable for many providers.”

But even if businesses are covered, the homeowner’s problem still looms for many, since insurance companies writing homeowner’s policies do not appear to be consistently making distinctions between those with business liability policies and those without. “It was thought initially that if they had commercial liability they were a better risk, because obviously they had a separate policy. That hasn’t really been the case,” Weismantel says, adding that the problem is growing. “I’ve been in this field now for 10 years, and we’d get a call occasionally the first five years I was here from somebody whose homeowner’s was canceled. It seems the last couple of years especially, it’s been more prevalent that we get calls from people having difficulty.”

Weismantel is also an advisor to the Family Child Care Association of New York State, and says that both the association and the CDCCC have noticed a serious upswing in incidents of homeowner’s insurance loss and difficulty finding new underwriters for both homeowner’s and business liability coverage.

“Over the course of the two years that we’ve been looking into this, I think people feel the situation’s gotten much worse,” agrees GULP’s Antos.

Advocates agree that the loss of homeowner’s insurance presents quite a difficult choice for many providers, which Weismantel sums up saying: “Do they just close their business and go work somewhere else? Because in most cases, if people have mortgages then they have to have homeowner’s insurance.” She estimates that of about 21,000 regulated child-care programs in the state, approximately 14,000 of them are family providers. “That would be a big dent [in the availability of child care] if they couldn’t get homeowner’s insurance, because that’s where family [care] is, in the home,” she says.

A couple of years ago, Mrs. D’s 24-Hour Day Care changed from family child care to group child care, which meant the DeAngelos could take on a few more children at a time. They put a sign out in front of their house saying “We’ve expanded,” and their insurance agent asked about it. Upon Starr’s explanation, the agent informed her that the umbrella rider on their existing homeowner’s policy provided only for the care of a couple of children.

The agent said the DeAngelos needed to find separate coverage for the business, but getting a liability policy wasn’t so easy. “I thought it was just on us if something happened,” Starr says. “We tried for a year and a half to get insurance to get liability coverage. We had no luck.”

Don would get up extra early in the morning and hit the computer hunting for companies who might write them a policy, to little success. “The reason we couldn’t get the liability is because we have a pool that we use, and if it wasn’t the pool, then they wouldn’t cover the third shift,” he explains. Pools for New York caregivers are touchy because a child drowned in a pool at a day care in Rochester. Companies also think that an elevated risk of sexual abuse comes with third-shift care.

As if the liability hunt weren’t bad enough, the DeAngelos were notified last summer that they were losing their homeowner’s insurance. The agent called Starr and told her that “someone called our insurance company and told us you’re doing home day care over there and we’re cutting your insurance.” The DeAngelos hadn’t realized their insurance company required them to get separate coverage for the business in order to keep their homeowner’s policy.

“We lost it in October and we didn’t get it back until December and we had to go out of the country to get it,” Starr says in exasperation. “What would have cost us $500 here for homeowner’s, we had to pay $2,240 for there. We didn’t have a choice.

“We went through every place in New York, and no one will touch you,” she explains. “If you go out of state, the minute you brought up that you were from New York state, [they say] ‘Oh, we don’t do New York.’”

The DeAngelos had to go to Lloyd’s of London for their homeowner’s policy, much to the shock of New York’s child-care advocates. Lloyd’s of London is famous for insuring everything from shipping cargo to gold bars to Tina Turner’s legs.

“Starr’s story in particular was so frustrating,” says Weismantel. “She tried everything.”

Sheila Long, a licensed family child-care provider in Schenectady, called her agent to find out if the company could insure the DeAngelos. Not only was the answer no, but she was told this would be her last year of homeowner’s coverage as well. Long has been in child care since the mid-’70s, went to school for early childhood development, and started her in-home day care, Little Sprouts, in Schenectady in 1990. Long says she’s just hoping she’ll “be able to find a company that will say, ‘Oh, you can stay in business with your 12 children,’ and not tell me ‘We’re only going to cover six.’”

In-home businesses dealing with children are generally viewed as riskier than, say, telecommuting, Bucciferro says. “Any kind of child-care business, whether it’s a child-care center or whether it’s a family child-care business, has significant risk associated with it—not just the injury to kids, but also the potential for allegations in terms of sexual misconduct and sexual abuse of kids, that’s a real concern. Of course, there’s even the more serious potential for serious injuries and even death.”

And Weismantel thinks that right now insurance companies simply don’t want to take that risk “even though in reality the claim history is low.”

Representatives from several insurance companies that canceled local providers’ policies were contacted, but would not give reasons why their company was unwilling to insure many in-home child-care providers, because that is “proprietary information.” Others did not return Metroland’s phone calls.

But Bucciferro says there “may be some relief in sight, as the insurance industry itself recovers. As insurance companies start to make money, they may be more willing to insure providers. As rates start to go up there may be more potential of profitability. I think it’s also important that homeowner’s insurance companies need to be assured that they’re not going to get dragged into day-care liability claims.”

Tom Copeland, from the Redleaf National Institute, a child-care resource nonprofit in Minnesota, lobbied for that state’s Legislature to pass a law stipulating that a provider’s homeowner’s insurance company could not be drawn into a child-care liability claim. They hoped the legislation would entice insurance companies back into insuring child-care providers’ homes, but companies remained reluctant to reinstate coverage before the law was tested in court. That doesn’t bode well for providers, Copeland says, especially when matched with economic uncertainty. “Insurance companies left and right are saying we’re not going do deals with any business dealing with children. The idea that they’re not going to get sued under the Minnesota law is seemingly not really making a difference,” he says. And local advocates aren’t sure a legislative solution is best for New York.

Representatives from GULP and the Family Child Care Association hope to meet with the state in the near future to continue that discussion and seek some solutions.

“We’ve initially put the ball in [the Legislature’s] court by doing this survey, and showing that the problem is out there,” Antos says. “Now we have to go back to them and to the insurance department and say, what next?”

Some advocates hope that pressure on companies from the state could help providers with homeowner’s insurance companies, especially if they have liability coverage. But finding liability policies is still hard for many. Suffolk County is the only one in the state to provide liability insurance for its contracted providers, and considers it just a part of the county’s child-services costs. “I think Suffolk is a good model,” Antos says. “But they’re the only county that I know that does that. I also think that counties probably, if they do it that way, can negotiate better rates because they’re buying policies in bulk.”

Copeland says that attempts to use group bargaining power of the providers and state connections could prove fruitful for securing homeowner’s coverage as well. “Since [providers] have this connection with the state, getting money from the state or county, why can’t we connect them insurance-wise?” he asks.

In the meantime, the impact of losing homeowner’s insurance still has the potential to be dire for in-home child care. The DeAngelos wonder what will happen to all of those kids in family and group child care if their providers close their doors, because there simply aren’t enough centers to take them all in. They’ve also heard through the child-care grapevine that some of their fellow providers intend to take their businesses underground and go uninsured, hoping to keep their business a secret and chancing it with their homeowner’s insurance, an approach that scares the DeAngelos and advocates alike. Unless parents know to ask, they won’t know who is or isn’t insured.

DeAngelo believes that eventually all of the state’s home day cares will be put in this situation, and fears that because registered and licensed providers are on the state’s books, the insurance companies could even seek providers out to drop from the homeowner’s rolls.

If providers have to close at risk of losing their homes once homeowner’s insurance becomes unavailable or unaffordable, the parents will be the first affected. “If you look at it long-range,” Weismantel says with a sigh, “it also affects employers because if families are affected, then they can’t get to work because they don’t have child care, then obviously employers are affected, so it trickles down, and therefore the economy’s affected. So it could have big consequences.”

“We love the kids,” DeAngelo says, “but we can’t lose our home either, and that’s what you’re asking us to choose between.”