Why Are Childcare Centers in Texas Facing Higher Insurance Costs?

A breaking crisis published just this week reveals that Texas childcare centers are facing a collapse in the insurance market — and the cost is landing directly on Texas families. Here is the complete picture.

Carriers Have Nearly Abandoned the Market

The most alarming development in Texas childcare insurance is how few options remain. There are only two traditional insurance carriers left in Texas writing childcare policies — down from dozens before 2019. Some Texas childcare providers now need six or seven separate policies to cover what one policy used to handle — a fragmentation that dramatically increases both cost and administrative burden for centers already operating on razor-thin margins.

The Unexpected Legal Trigger: Childhood Abuse Laws

The root cause of the carrier exodus is not what most people would expect. Laws intended to give survivors of childhood sexual abuse more time to seek justice have had an unexpected effect on the insurance industry — opening the door to historical claims against policies that had long expired. The number of claims and the number of old expired insurance policies that were being reopened were things nobody could have predicted — and with no way to predict how many more claims could surface, insurers simply stopped covering childcare centers entirely.

Premiums Have Nearly Doubled Since the Pandemic

The financial impact on individual centers has been severe. Some providers say their annual insurance costs have nearly doubled since before the pandemic — with higher premiums, larger deductibles, and fewer coverage options compressing already tight budgets. The higher insurance costs have increased tuition prices and led to lower raises as providers try to absorb some of the costs — meaning both families and childcare workers are bearing the burden of the market collapse simultaneously.

Texas Weather and Liability Claims Are Contributing Factors

Beyond the legal trigger, everyday operational risks are compounding the problem. Property damage from hail and severe freezes, along with increased scrutiny on licensing records, are contributing to the rise in insurance premiums for childcare providers across North Texas. The median general liability award against daycare operators climbed from $75,000 to $145,000 over the past decade — and the average childcare workers' compensation claim now costs $41,003.

What It Means for Texas Families

Texas families face a childcare system under pressure from three directions at once: insurance costs pushing up tuition, state subsidy cuts reducing available slots, and federal pandemic funding running out at the end of 2026. Texas lowered the minimum liability insurance requirement for childcare centers from $300,000 to $100,000 per incident — but providers say that legislative action has not solved the larger problem of finding coverage they can afford. Contact the Texas Department of Insurance if your childcare center is struggling to find coverage.