Why are Texas childcare centers facing higher insurance costs?

Higher insurance costs are driven by an increase in claims and potential liabilities, particularly related to extended statutes of limitations for sexual abuse lawsuits, leading many insurers to leave the market.

What are childcare centers doing to cope with rising insurance expenses?

Providers are increasingly turning to the surplus-lines insurance market, which offers coverage but at a higher cost and with more complex policy structures.

Texas Childcare Centers Face Soaring Insurance Costs Amidst Insurer Exodus

Childcare providers in Texas are struggling with significantly higher insurance premiums and fewer options as multiple insurance carriers have withdrawn from the market, impacting their ability to operate.

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2026-10-07 · Updated 2026-10-07

Childcare centers across Texas are experiencing a sharp increase in insurance costs, forcing many to seek alternative and often more expensive coverage options. This situation has arisen as a substantial number of insurance carriers have exited the childcare market, citing concerns over rising claims and the potential for large payouts.

The exodus of insurers is partly attributed to a 2019 Texas law that extended the statute of limitations for childhood sexual abuse lawsuits from 15 to 30 years. This change allows survivors to file claims related to policies written decades ago, leading to unexpected financial liabilities for insurers. Insurance agents specializing in the childcare industry report that this has resulted in significant payouts on old, expired policies.

As a result, only two traditional insurance carriers reportedly remain in the Texas market for childcare centers. This limited competition has led to fewer choices and dramatically higher premiums for providers. For instance, one center director saw her insurance costs jump from approximately $30,000 to $40,000 annually, despite having no insurance claims filed in seven years.

With traditional insurers withdrawing, many childcare providers are turning to the surplus-lines insurance market. While this market helps keep businesses operational, it typically comes with higher costs, more exclusions, and the need for multiple separate policies to achieve adequate coverage. This fragmentation and increased expense strain the already tight financial margins of many childcare facilities.

Providers have voiced their concerns to lawmakers, highlighting that the rising insurance expenses necessitate difficult financial decisions, such as increasing tuition, reducing staff salaries, or cutting programs. Although Texas has reduced the minimum required liability insurance for childcare centers, advocates argue this measure does not address the fundamental issue of affordable and available insurance.

FAQ

Why are Texas childcare centers facing higher insurance costs?: Higher insurance costs are driven by an increase in claims and potential liabilities, particularly related to extended statutes of limitations for sexual abuse lawsuits, leading many insurers to leave the market.
What are childcare centers doing to cope with rising insurance expenses?: Providers are increasingly turning to the surplus-lines insurance market, which offers coverage but at a higher cost and with more complex policy structures.