The services provided by child care professionals truly are essential. Not only do they help make it possible for parents to hold down jobs, they help children start learning valuable skills. But among all the types of businesses impacted by COVID-19, child care facilities are facing some of the most significant long-term effects.
As the coronavirus pandemic hit, many parents were forced into very difficult situations because of limited options for childcare. Initially, California’s shelter-in-place orders only allowed child care centers to remain open to provide care for children of essential workers, but were later allowed to care for other children as well. When schools and child care facilities were forced to close down or limit their operations, lots of parents struggled to take care of their children while trying to work from home at the same time. Parents who lost their jobs because of the pandemic may not have been able to continue paying for child care while they looked for work or transitioned into new jobs.
The pandemic has also caused a crisis for child care professionals, with hundreds of thousands of them losing their jobs because of the restrictions. Since many areas were already considered “child care deserts” before the pandemic because of their low availability of childcare resources, some experts are concerned that permanent closures of daycare and other child care facilities caused by the pandemic could potentially cause even more large-scale problems post-pandemic.
COVID-19 Business Losses for Daycare Centers
Among daycare centers that have remained open or have reopened, operators find themselves in the position of trying to cover more expenses with less working capital. In a survey of California child care centers from the University of California Berkeley, nearly all respondents reported having fewer children attending than they did before the pandemic. On average, centers that reported having fewer children attending were operating at about 44% of their pre-pandemic attendance. Very commonly, centers reported having families who were unable to pay or unable to attend because of a loss of income. To be able to stay open, many centers have had to make changes to improve safety, but those changes have come at an added cost. Purchasing things like PPE and extra cleaning supplies have increased their overall operating expenses.
Daycare centers typically operate on very small margins and in many cases, daycare centers that are open are open because they simply can’t afford to close. Even if there are concerns about exposure to the virus, a temporary closure could quickly become permanent without some money consistently coming in. Very often, owners of daycare centers and other child care facilities have made significant sacrifices to be able to stay open. In the study by UC Berkeley, many people said they have foregone paying themselves or used their personal credit cards to cover operational expenses.
On top of everything else, many daycare centers are trying to keep going with fewer employees than they had been before the pandemic. Very often, care centers report having laid off/furloughed employees or have employees who are taking a leave of absence, aren’t working because of health concerns, or aren’t able to work because they need to care for their own children.
Business Interruption Insurance for Child Care Centers
Childcare facilities can have some unique needs when it comes to insurance and one type of coverage many centers have is business interruption insurance.
Business interruption insurance is intended to help make it possible for businesses to resume operations if they need to shut down temporarily. For example, if a daycare center is damaged by a fire or a storm, it might not be safe for people to be in the building until repairs are completed. Business interruption insurance would help cover operational expenses and monetary losses that would come up during that temporary closure, such as rent/mortgage payments, utility bills, employee payroll, and lost revenue. If you would be able to keep working at another location, it can also help with relocation expenses.
Unfortunately, with so many people making business interruption claims because of the coronavirus pandemic, insurance carriers are trying very hard to avoid paying as many of those claims as possible. Some daycare center owners have reported that their claims were denied because there weren’t any active cases of coronavirus reported at their location. Very often, insurers are trying to argue that COVID-19 does not count as a type of physical property damage needed for their business interruption policy to apply.
Help for California Daycare Operators
The coronavirus pandemic has been stressful enough. The last thing you need is to worry about dealing with insurance companies who will gladly accept your premiums, but deny your claims when you need them most.
The Wallace Firm is now working with California business owners who have experienced losses because of the pandemic. Our lawyers have experience taking on insurance companies and holding them accountable so that our clients get the benefits they need. We’re handling these cases on a contingency basis, so you won’t need to worry about any fees unless we help you succeed. Contact us today for a free case evaluation.