Business Notes Insurance Day

Besides causing untold anxiety for parents, the rash of child-abuse accusations against day-care centers during the past year is having a financial side effect. Insurance companies, which anticipate a wave of costly lawsuits from victims, have started drastically boosting the premiums they charge day-care centers. A neighborhood facility in San Antonio, for example, was abruptly informed by its insurance company earlier this year that the center's $600-a-year policy would be canceled. When the center took out insurance from another company, it cost $8,000.

While insurance companies point out that they are increasing premiums for many other types of liability coverage because of a general increase in lawsuits, day-care operators think they are being unfairly stereotyped. Says Marilyn Smith, director of the National Association for the Education of Young Children: "If insurance companies would look at them individually, they would find that not all these day-care centers are high risk." The skyrocketing premiums could bring higher fees for day-care tuition and even put some centers, especially small ones, out of business.