Shelly's daycare was hit by a powerful supercell thunderstorm last spring as a dry line raced across the High Plains into Lubbock. That one powerful convective storm changed her daycare business dramatically.
Strong winds tore off part of her roof, allowing rain to flood inside and ruin the floors, furniture, and supplies. The daycare wasn’t usable and obviously was not safe for children. Shelly had no choice but to close for repairs.
The repairs took six full weeks! During that time, tuition payments stopped coming in and some families decided that they needed to find another daycare facility for their children. Rent, utilities, and employee payroll still needed to be paid even though she was trying to focus on the rebuild.
Shelly assumed her business insurance coverage would take care of everything. It did cover the building repairs from the property damage, but it didn’t help replace all of that lost income. She was left scrambling to keep her business afloat.
That’s when she learned about business interruption insurance. This coverage helps daycare owners stay financially stable when they have to close due to a covered disaster. Without it, they may be forced to use personal savings or take out loans just to keep up with expenses. For Shelly, this kind of protection would have made the difference between a temporary inconvenience and a major financial struggle.
When a daycare center is forced to close because of storm damage, a fire, or another covered event, business interruption insurance helps replace lost income. It also helps cover ongoing expenses that don’t stop just because the doors are temporarily closed. Mortgage payments still have to be paid, utility bills keep coming, and key employees need their paychecks. These ongoing costs along with repair costs can quickly add up, leaving daycare owners in a difficult position if they don’t have backup funds.
Shelly thought that closing for a few weeks wouldn’t be the end of the world. After just one missed tuition cycle, she started to feel the pressure of the financial impact. Without business interruption coverage, she had to dip into her personal savings just to pay the bills. Had she been covered, she could have focused on reopening instead of worrying about how to stay afloat.
Not every type of closure qualifies for business interruption coverage. Shelly originally assumed that any unexpected loss of income would be covered, but she quickly learned that policies have limits. This type of insurance only applies when a closure is caused by a covered disaster, like a windstorm, fire, or hail damage. It does not cover all unforeseen events. Some not covered are voluntary shutdowns, situations where enrollment drops, or losses caused by pandemics unless specifically included in the policy.
This was an important lesson for Shelly. If she had taken the time to review her coverage before disaster struck, she could have made adjustments to avoid surprises. Many daycare owners assume they are protected, only to realize too late that their policy doesn’t cover these situations without an insurable event occurring.
Six weeks felt like an eternity for Shelly. Parents had to find new childcare, and she worried that some families wouldn’t return once she reopened. If she had been able to rent an alternative location, she could have kept her daycare running instead of shutting down completely while repairs were ongoing.
Some business interruption policies offer extra expense coverage, which helps cover the costs of getting back to business faster. This could include renting a temporary location, replacing damaged supplies, or paying for faster repairs. If Shelly had this coverage, she could have continued operating instead of losing six weeks of income.
When Shelly first reached out to Insurance For Texans to look into business interruption insurance, she was surprised to learn that coverage doesn’t start immediately after a disaster. Most policies have a waiting period, usually between 24 and 72 hours, before payments begin. That means daycare owners need to have enough money on hand to cover expenses during that initial period of interruption.
Coverage also doesn’t last forever. Policies have limits on how long they will cover lost income, ranging from a few weeks to several months. Shelly appreciated understanding these details in a potential new policy so she knows exactly how long she would be covered in case she ever faces another unexpected disruption from a hail storm.
Before the windstorm, Shelly hadn’t updated her insurance in years. She assumed she had enough coverage, and it seemed like a hassle to look at it every year. Her thoughts changed a bit after going through a six-week closure.
Shelly realized her daycare had changed. Enrollment had grown through the years, new equipment had been added, and her payroll costs were higher than when she first opened. Her old policy didn’t reflect these changes, leaving her more vulnerable than she realized.
Shelly used this as a chance to sit down with an independent agent who specializes in daycare insurance packages. Reviewing her business interruption coverage every spring before storm season allows he rot adjust her daycare insurance coverages as her business changes.
She makes sure her policy limits match her current expenses, and she talks with her insurance agent about any updates her daycare might need. It’s a simple step that can prevent major problems down the road.
Shelly wanted more than just a basic insurance policy. She needed financial protection for her daycare and future. She turned to True Texas Education Insurance. This program designed by Insurance For Texans was built to customize coverage for Texas daycare's unique needs and business owners.
Now, if another storm forces her to close and find a temporary location, she knows she has business interruption coverage that will help replace lost income and cover operating expenses while she gets back on her feet. She no longer has to worry about how she’ll pay rent or keep her employees during a temporary closure.
Shelly learned the hard way that disasters can happen at any time in the blink of an eye, and recovering without income can be difficult. Business interruption insurance helps daycare owners stay afloat even when unexpected events happen.
Click the button below to learn how True Texas Education Insurance can help protect your daycare before the next storm arrives.