How much does insurance cost for a dog daycare business?

This article was written by our expert who is surveying the industry and constantly updating the business plan for a dog daycare.

Our business plan for a dog daycare will help you build a profitable project

Who wrote this content?

The Dojo Business Team

A team of financial experts, consultants, and writers

We're a team of finance experts, consultants, market analysts, and specialized writers dedicated to helping new entrepreneurs launch their businesses. We help you avoid costly mistakes by providing detailed business plans, accurate market studies, and reliable financial forecasts to maximize your chances of success from day one—especially in the dog daycare market.

What does it typically cost per month and year for all the insurance a dog daycare needs?

A dog daycare business typically spends between $125 and $580 per month on insurance, which translates to $1,500 to $7,000 annually for comprehensive coverage.

Small home-based dog daycares operating with minimal staff and caring for fewer than 10 dogs daily usually pay $1,500-$3,500 per year. This includes general liability insurance ($400-$800), animal bailee coverage ($129-$500), and basic property insurance if needed.

Medium-sized commercial dog daycare facilities caring for 20-50 dogs daily typically pay $3,500-$7,000 annually. These businesses need higher liability limits, more substantial animal bailee coverage, workers' compensation for multiple employees, and commercial property insurance for their leased or owned facility.

Large dog daycare operations with multiple locations or those offering additional services like grooming and training can expect to pay $7,000-$12,000 or more annually. These businesses require maximum coverage limits across all policy types and often need additional specialty coverages.

Most dog daycare owners find that bundled insurance packages offer the best value, combining all necessary coverages at a 10-20% discount compared to purchasing policies separately.

Which insurance policies are absolutely required by law for dog daycares?

The legally mandatory insurance requirements for dog daycares vary by state and local jurisdiction, but general liability and workers' compensation are the most commonly required policies.

General liability insurance is mandatory in most states if you lease commercial space, as landlords typically require minimum coverage of $1 million per occurrence. Even home-based dog daycares may need this coverage to comply with local business licensing requirements. The average annual cost ranges from $400 to $1,500.

Workers' compensation insurance becomes legally required the moment you hire your first employee in most states, regardless of whether they work full-time or part-time. Annual costs typically range from $840 to $3,000, calculated based on your total payroll and state-specific rates.

Commercial property insurance, while not always legally mandated, becomes required if you finance equipment or lease a commercial space. Most commercial leases stipulate minimum property damage coverage equal to the replacement value of the building and contents.

Some cities and counties also require specific pet business licenses that mandate animal bailee coverage, though this varies significantly by location.

What optional insurance should dog daycare owners seriously consider?

What coverage amounts should I get for general liability, animal bailee, and property insurance?

Industry standards recommend specific minimum coverage levels to adequately protect your dog daycare business from common risks.

For general liability, the standard coverage is $1 million per occurrence and $2 million aggregate. This level protects against most slip-and-fall accidents, dog bites to third parties, and property damage claims. Larger facilities or those in affluent areas should consider $2 million per occurrence.

Animal bailee coverage should start at $5,000 per animal with a $15,000 per occurrence limit for small operations. Medium to large dog daycares should carry $10,000-$15,000 per animal coverage, especially when caring for expensive breeds or in high-income areas where veterinary costs are substantial.

Commercial property insurance should equal the full replacement value of your building and contents. For a typical 3,000 square foot facility, this means $150,000-$300,000 in building coverage and $25,000-$75,000 for equipment, furniture, and supplies.

You'll find detailed coverage recommendations tailored to different business sizes in our dog daycare business plan.

How do insurance costs change based on my business size and location?

Insurance premiums for dog daycares vary dramatically based on multiple factors, with business size and location being the primary cost drivers.

Small home-based operations caring for 5-10 dogs typically pay $1,500-$3,500 annually, while medium facilities handling 20-50 dogs daily pay $3,500-$7,000. Large commercial operations with 50+ dogs can expect premiums of $7,000-$12,000 or more.

Location significantly impacts costs, with urban areas commanding 20-40% higher premiums than rural locations. States like California, New York, and Florida have the highest rates due to litigation frequency and higher property values. A dog daycare in Manhattan might pay twice what a similar business in rural Kansas pays.

The number of employees directly affects workers' compensation costs, which can range from $70 per month for a single employee to over $500 monthly for businesses with 10+ staff members. States with higher workers' comp rates like California and New Jersey can see costs 50% above the national average.

Additional factors include claims history (one significant claim can increase premiums by 25-50%), years in business (new businesses pay 15-30% more), and specific services offered (adding grooming or training increases liability exposure).

What's the typical yearly cost just for general liability insurance?

General liability insurance for dog daycares typically costs between $400 and $1,500 annually, with most businesses paying $600-$1,000 for standard coverage.

Small home-based dog daycares with minimal foot traffic and fewer than 10 dogs daily usually pay $400-$600 per year. These businesses benefit from lower premiums due to reduced exposure to slip-and-fall accidents and limited public access to the premises.

Commercial dog daycare facilities in leased spaces typically pay $800-$1,200 annually for general liability. The increased cost reflects higher foot traffic from pet parents dropping off and picking up dogs, plus greater property damage exposure in a commercial setting.

Premium factors include your chosen coverage limits (higher limits mean higher costs), deductible amount (higher deductibles reduce premiums), and specific policy endorsements. Adding coverage for off-premises activities like dog walks or pet transportation can increase costs by 15-25%.

Most insurers offer payment plans allowing monthly installments of $33-$125, though paying annually often provides a 5-10% discount.

How much does animal bailee insurance cost and what coverage is standard?

Animal bailee insurance costs between $129 and $1,080 annually, with most dog daycares paying $300-$600 for adequate coverage protecting client pets in their care.

The standard coverage provides $5,000-$15,000 per animal and $15,000-$30,000 per occurrence. This covers veterinary expenses if a dog is injured, becomes ill, or dies while in your care, regardless of fault. Monthly premiums typically range from $11 to $90.

Small dog daycares caring for neighborhood pets often choose basic coverage at $2,500-$5,000 per animal, costing $129-$300 annually. However, this may be insufficient for treating serious injuries or illnesses requiring emergency surgery or extended veterinary care.

Facilities in affluent areas or those caring for high-value breeds should consider higher limits of $10,000-$15,000 per animal. The cost difference is relatively modest – upgrading from $5,000 to $10,000 coverage typically adds only $15-$30 per month to your premium.

This coverage is particularly crucial because it demonstrates professionalism and builds client trust, showing pet parents that their dogs are protected even in worst-case scenarios.

What's the typical annual workers' comp cost for dog daycare employees?

Workers' compensation insurance for dog daycare businesses typically costs $840 to $3,000 annually per employee, depending on your state, payroll amount, and claims history.

The cost is calculated as a percentage of payroll, with dog daycare workers generally classified under animal caretaker codes carrying rates of $2.50 to $8.00 per $100 of payroll. For an employee earning $30,000 annually, expect to pay $750-$2,400 in workers' comp premiums.

State location dramatically impacts costs – California, New York, and Illinois have rates 40-60% above the national average, while states like Texas and Arkansas offer rates 20-30% below average. A dog daycare with three full-time employees in California might pay $7,500 annually, while the same business in Texas pays $4,500.

Part-time employees, administrative staff, and groomers may have different classification codes affecting their rates. Maintaining a safe workplace with no claims can earn experience modification discounts of 10-25% over time.

We cover state-specific workers' comp strategies in detail in our dog daycare business plan.

How much more expensive is insurance for commercial facilities versus home daycares?

Which insurance companies offer the best coverage and rates for dog daycares?

Several specialized insurance providers consistently deliver competitive rates and comprehensive coverage specifically designed for dog daycare businesses.

Pet Care Insurance (PCI) leads the U.S. market with tailored policies starting at $300 annually, offering customizable coverage including animal bailee, professional liability, and even lost key coverage. They understand unique pet business risks and provide 24/7 claims support.

Business Insurers of the Carolinas, despite their regional name, serves dog daycares nationwide with comprehensive packages. They're known for competitive bundled rates and excellent customer service, with many operators reporting 20-30% savings compared to general commercial insurers.

For Canadian dog daycares, PROfur specializes in pet care businesses with policies designed around Canadian regulations and liability concerns. International providers like Cliverton and Brooks Braithwaite serve UK operations with strong financial ratings and pet-specific expertise.

Major insurers like The Hartford, State Farm, and Progressive also offer pet business coverage, though their rates typically run 15-25% higher than specialists. However, bundling with existing business policies can sometimes offset this difference.

Which insurance coverages do small or home-based daycares often skip?

Small and home-based dog daycares frequently skip certain coverages to reduce costs, though this can leave significant gaps in protection.

Business interruption insurance tops the list of excluded coverages, with many owners believing they can quickly resume operations after a loss. However, a kitchen fire or severe water damage could close your home daycare for weeks, resulting in thousands in lost income.

Cyber liability coverage is commonly dismissed as unnecessary, especially by businesses using simple paper systems. Yet even basic online booking systems or storing client credit card information creates cyber exposure that could result in costly data breach notifications and legal fees.

Professional liability insurance is often excluded by home-based operators who view themselves as "just watching dogs." However, claims can arise from perceived negligence in supervising play, administering medications incorrectly, or failing to notice illness symptoms.

Equipment breakdown and employee dishonesty coverage also frequently get cut, though HVAC failures or theft by dog walkers can create substantial losses. These "minor" coverages typically cost $250-$750 annually but can save thousands when claims occur.

What do bundled insurance packages typically include and cost for dog daycares?

Bundled insurance packages for dog daycares combine essential coverages at discounted rates, typically saving 10-25% compared to purchasing policies separately.

Small business bundles costing $1,500-$3,500 annually usually include general liability ($1M/$2M limits), animal bailee coverage ($5,000-$10,000 per pet), and basic property insurance. These packages suit home-based operations or small commercial facilities with fewer than 15 daily dogs.

Medium business packages ranging from $3,500-$7,000 annually add workers' compensation, higher liability limits ($2M/$4M), increased animal bailee coverage ($15,000+ per pet), and often professional liability. These comprehensive packages protect growing businesses with multiple employees and 20-50 daily dogs.

Premium packages for large operations ($7,000-$12,000+) include maximum coverage limits, business interruption insurance, cyber liability, employment practices liability, and commercial auto coverage. These bundles serve multi-location businesses or facilities offering grooming, training, and boarding services.

Most bundles allow customization, letting you adjust limits and add specialized coverages. Payment plans typically offer monthly options, though annual payment often includes additional discounts of 5-10%.

Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are encouraged to consult with a qualified professional before making any investment decisions. We accept no liability for any actions taken based on the information provided.

Sources

1. Insureon - Pet Care Business Insurance Cost
2. Pet Business Insurance - Dog Daycare Insurance Cost
3. Business Plan Templates - Doggy Daycare Running Costs
4. Pet Care Insurance - Animal Bailee Insurance
5. Reddit - Insurance for Dog Walking Business
6. Pet Care Insurance - Workers Compensation
7. Insureon - Workers Compensation Insurance Cost
8. Forbes - Workers Compensation Insurance Cost
9. Morison Insurance - Dog Daycare Insurance
10. Cliverton - Dog Day Care Insurance