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Tennessee writes the most complete daycare insurance mandate in the country — four coverages, with dollar floors on each. The licensure rules (1240-04-01-.05(4), current through the February 2026 revision) require centers to carry $500,000/$500,000 general liability, $5,000 medical payments, $500,000 combined single limit auto if they transport, and — rare in any state — $100,000/$300,000 sexual abuse and molestation coverage. The declarations page lives in your licensing file, reviewable by the Department.
One policy, priced for a Tennessee daycare
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What Tennessee Actually Requires
| Coverage | Tennessee requirement |
|---|---|
| General liability (centers) | $500,000 per occurrence / $500,000 aggregate minimum; family and group homes $300,000/$300,000 (Rule 1240-04-01-.05(4)) |
| Sexual abuse & molestation coverage | Required: $100,000 per occurrence / $300,000 aggregate — a mandate almost no other state writes |
| Medical payments + auto | $5,000 medical payments; auto liability $500,000 CSL for centers ($300,000 homes) on vehicles used to transport |
| Proof | The insurance policy’s declarations page kept in agency records, available for Department review |
Four Coverages, Each With a Floor
Most states that mandate daycare insurance name one policy; Tennessee specifies a stack. The sexual-abuse-and-molestation line is the one to notice — it’s typically an optional endorsement that standard GL policies exclude, and Tennessee makes it a licensing condition at $100,000/$300,000. When you quote coverage in this state, ask for the endorsement by name; a bare GL certificate doesn’t satisfy the rule.
The exemptions cover government-run and self-insured public programs, not private operators. And Tennessee’s workers’-comp threshold (five or more employees) comes with its own trap: dropping below five doesn’t end the duty until a Form I-3 withdrawal is filed with the state.
The Coverages Every Daycare Carries Regardless
- General liability with abuse & molestation coverage. The playground injury and the allegation are different claims; a daycare policy without A&M cover is missing the exposure the business is actually judged on.
- Commercial auto if you transport children — a personal policy excludes business use.
- Workers’ compensation once you employ staff (required in Tennessee at 5+ employees — and exiting below five takes a Form I-3 filing).
- Property and contents for the build-out, equipment and food stock.
Parents ask if you’re insured. So do licensors.
A certificate of insurance answers both in one page. Quotes are free and don’t require a phone call.
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Frequently Asked Questions
How much liability insurance does a Tennessee daycare need?
Centers and drop-in centers: at least $500,000 per occurrence and $500,000 aggregate general liability; family and group homes: $300,000/$300,000. Rule 1240-04-01-.05(4) also requires $5,000 medical payments coverage, auto liability ($500,000 CSL for centers) on vehicles that transport children, and $100,000/$300,000 sexual abuse and molestation coverage.
Does a standard general liability policy satisfy Tennessee’s daycare rules?
Usually not by itself — Tennessee separately requires sexual abuse and molestation coverage ($100,000 per occurrence / $300,000 aggregate), which many standard GL policies exclude. Ask for the endorsement explicitly and keep the declarations page in your licensing records.
Comparing states? See daycare insurance requirements in every state, or the full guide to starting a daycare in Tennessee.
Sources
| Source | What it confirms |
|---|---|
| TN DHS Rule 1240-04-01 (Feb 2026 revision) | The full four-coverage mandate with dollar minimums (-.05(4)) |
