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Carla Wright (center) helps her students work through a sticker worksheet at Journeys Child Development Center in Grand Prairie, Texas, on Tuesday, Jan. 28, 2025.<\/p>\n
Liz Rymarev\/Dallas Morning News<\/p>\n
North Texas childcare providers<\/a> say rising insurance costs are pushing up tuition and squeezing already-thin budgets, adding another burden to an industry struggling to keep care affordable for families<\/a>.<\/p>\n Licensed and registered childcare providers are required by state law to maintain liability insurance. They are facing higher premiums, larger deductibles and fewer companies willing to cover them.<\/p>\n Some providers say their annual insurance costs have nearly doubled since before the pandemic. Samantha Phillips, an insurance agent who works with childcare providers, said she has seen some centers close after they could not absorb another financial hit.<\/p>\n Article continues below this ad<\/p>\n Phillips said she has counted 12 childcare providers nationwide that closed since January, including three in Texas and two in North Texas. She said the closures reflected rising costs across the board and lower enrollment as public schools take in preschoolers<\/a>, leaving providers with less money to cover their expenses.<\/p>\n Related: Texas childcare waitlist grew as families struggled to afford care<\/a><\/p>\n Other childcare providers have seen more modest increases, underscoring how widely experiences vary depending on the provider, property, coverage and insurer.<\/p>\n Hemant Patel, who operates three childcare centers<\/a>, one in Fort Worth near Keller, one in Flower Mound and one in Carrollton’s Castle Hills community, said his annual insurance costs have risen from roughly $25,000 to $28,000 per center before the pandemic to between $50,000 and $60,000 today.<\/p>\n Patel said the largest increases came after the 2021 winter storm, which caused widespread property damage across Texas. His centers also have faced higher deductibles for water damage, hail and other risks.<\/p>\n Article continues below this ad<\/p>\n A deductible for one water-damage claim increased from about $5,000 to $50,000 for the building and another $50,000 for business property, Patel said. That meant the center had to absorb the cost of replacing tables, chairs and other equipment after damage that did not reach the deductible.<\/p>\n “The higher insurance cost<\/a> have increased tuition prices and lead to lower raises as we try to absorb some of the costs,” Patel said in an email.<\/p>\n Childcare providers face fewer insurance options<\/p>\n Some providers are struggling to find replacement coverage after insurers declined to renew their policies or stopped writing childcare coverage in Texas.<\/p>\n The Texas Licensed Child Care Association began hearing about widespread\u00a0nonrenewals in early 2024, said Tim Kaminski, the organization’s president. Providers who had stayed with the same insurance company for years were suddenly told their policies would not be renewed, he said.<\/p>\n Article continues below this ad<\/p>\n Those who found replacement coverage sometimes faced premiums that were double or triple what they had paid the previous year,\u00a0Kaminski said.\u00a0Some insurers told providers only that they were no longer writing policies in Texas.<\/p>\n Related: Here’s why childcare has become a workforce issue for Dallas employers<\/a><\/p>\n Phillips said the number of admitted carriers her agency can currently approach for many Texas programs has narrowed to roughly two. Admitted carriers are insurance companies licensed by Texas to sell coverage in the state.<\/p>\n When providers cannot find coverage from those companies, they may turn to surplus lines insurers, which cover risks that standard insurers will not and are not licensed to sell insurance in Texas. Surplus lines coverage can be more expensive, Phillips said.<\/p>\n Phillips said she has seen providers respond by\u00a0raising tuition, eliminating transportation, ending summer programs, reducing bonuses and closing their centers. One client told Phillips that an\u00a0insurance increase<\/a> forced them to redirect money they had budgeted for employee bonuses.<\/p>\n Article continues below this ad<\/p>\n “The combination of what they can realistically do” is limited, Phillips said. Providers cannot raise tuition indefinitely without pricing families out of care, but they also cannot absorb every new cost and remain financially stable.<\/p>\n Kurt\u00a0Hutson, owner of Rise Academy in Allen, said his total insurance premium, including property, general liability and umbrella coverage, rose substantially over the past two years. He asked that his specific premium amounts not be published, but said the increase amounted to roughly $2 per week for every child if it were passed directly to families.<\/p>\n Hutson said the increase has affected how much the academy can spend on teacher raises and other expenses. He said childcare providers rely almost entirely on tuition revenue, so higher operating costs eventually place pressure on families.<\/p>\n Why insurance premiums are rising<\/p>\n Property damage from hail and severe freezes is one reason insurers have increased premiums and deductibles, providers and brokers said. Frozen pipes and sprinkler systems can flood child care buildings, creating expensive claims.<\/p>\n Article continues below this ad<\/p>\n<\/p>\n