Yes. A single employment-related claim, even one your daycare eventually wins, can raise what you pay for insurance at your next renewal. The National Association of Insurance Commissioners (NAIC) is direct about this for small businesses: "high past-claims history can increase insurance costs". For a daycare or childcare center, where staff turnover and close daily contact between employees, children, and parents create more opportunities for employment disputes than in many other small businesses, that's worth understanding before a claim ever happens, not after.
General liability insurance protects your daycare against claims of bodily injury or property damage. It does not cover claims brought by your own employees. That's the specific gap Employment Practices Liability Insurance, or EPLI, is built to fill. According to the NAIC, EPLI is meant to cover "claims of sexual harassment, wrongful termination of employees, failure to employ or promote, or race and gender lawsuits", and it typically pays the legal fees involved in defending against one of these lawsuits, whether or not the claim ultimately succeeds.
For a childcare business, the employees named in these claims are often the same staff who are alone with children for hours at a time, which makes hiring, discipline, and termination decisions higher-stakes than in a typical retail or office setting.
Childcare is a demanding, comparatively low-wage field, and that combination shows up in the data. Research published by the U.S. Bureau of Labor Statistics in its September 2025 Monthly Labor Review notes that the early educator workforce "has experienced persistent instability", and that "inadequate compensation may deter people from entering the field and may contribute to high turnover". High turnover means more hiring, more onboarding, more terminations, and more performance conversations, each one a potential source of an employment claim.
At the federal level, these claims are common enough to track closely. The Equal Employment Opportunity Commission (EEOC) reported that it processed 88,201 new discrimination charges in fiscal year 2025 and secured $660 million for 17,680 workers, the agency's third-highest monetary recovery total in recent history. Small employers, including single-location daycares and home-based centers with just a few staff, are not exempt from this exposure just because of their size.
Insurance pricing is forward-looking. Underwriters use your claims history as one signal of future risk, and the NAIC lists claims history among the standard factors insurers weigh when setting premiums. A single EPLI claim on your record, even a meritless one that was successfully defended, can:
This is why the smarter frame isn't “will EPLI cost more after a claim,” but “what does my daycare do now to reduce the odds of a claim reaching that point at all.”
EPLI is protection for when a claim happens, not a substitute for reducing how often it does. A few practices that carry real weight with employment claims in childcare settings:
Written policies, consistently applied. An employee handbook covering hiring, discipline, and termination, applied the same way for every staff member, is one of the most common things a defense attorney or underwriter looks for.
Documented performance conversations. Verbal-only warnings are hard to defend later. A brief written record of a performance issue, dated and specific, protects both the employee and the business.
Clear reporting channels. Staff need to know how to report a concern internally before it becomes an external complaint or lawsuit.
Prompt, documented responses to complaints. How quickly and thoroughly a complaint is handled often matters as much to a claim's outcome as the underlying facts.
None of this eliminates employment risk. It reduces the frequency and severity of the claims that do occur, which is the same thing an underwriter is looking at when deciding your next premium.
If your daycare doesn't currently carry EPLI, or you're not sure how your existing policy would respond to an employment claim, talk with a childcare insurance specialist who can review your staffing size, turnover, and current coverage together. Contact Insure Your Childcare today at (844) 844-3816 or request a quote to learn more about EPLI and other coverage built specifically for childcare centers and home daycares.
Read Also: Small Home Daycare EPLI Insurance
NAIC, Small Business Insurance; consumer guide (CGL vs. EPLI coverage scope, claims history and premium impact): content.naic.org/consumer/small-business.htm
NAIC, Why Are My Insurance Premiums Increasing? (Nov. 19, 2024; claims history as a standard rating factor): content.naic.org/article/why-are-my-insurance-premiums-increasing
U.S. Equal Employment Opportunity Commission, FY2025 results (published Apr. 6, 2026; 88,201 charges filed, $660 million recovered for 17,680 workers): eeoc.gov - record-breaking results release
U.S. Bureau of Labor Statistics, Monthly Labor Review, Early educators and public school teachers: a comparison of labor market outcomes" (Sept. 2025): bls.gov - early educators labor market outcomes
Employee count lowers your exposure but does not remove it. Wrongful termination and harassment claims can be filed by a single employee against a very small employer, so many home daycares still carry EPLI alongside general liability.
No. Standard commercial general liability insurance is built for bodily injury and property damage claims from third parties, not disputes with your own staff. Employment-related claims require EPLI as separate coverage.
Typically, yes. EPLI policies generally cover the cost of defending a covered claim regardless of the outcome, which matters given how expensive employment litigation can be to defend even when the daycare did nothing wrong.
There's no single fixed period. Carriers commonly review several years of claims history at renewal and when you shop for new coverage, so a claim's effect on pricing can extend well beyond the policy term in which it was filed.
