Welcome to the Morton Michel's Insurance Blog where you will find regular, informative and helpful articles on childcare insurance.
Keep an eye on your policy - May 2013
Insurance is the kind of subject that can glaze over the eyes. But
for professional nannies, it’s an issue of vital importance. Morton
Michel’s Catherine Bates explains why.
As in any walk of life, there are hundreds of reasons why having the right insurance
cover could one day be the saviour of a nanny.
Take this scenario, for example: a nanny brings a cup of coffee to the dining room table where the toddler in their care is sitting, he reaches out and pulls it over, covering himself in hot liquid and sustaining bad scalding for which he needs hospital treatment.
It seems like a simple accident, doesn’t it? But in fact, the nanny could be successfully sued because they
made the coffee too hot. Even though they didn’t deliberately leave it in the child’s reach, they should have anticipated this type of accident might happen, and prepared a cooler drink.
This scenario isn’t made up – it actually happened a few years ago to a childminder. But if this accident
had happened to a nanny, then the legal case result could have been the same. And if the nanny in
question had public liability insurance, any ensuing damages would have been paid by his or her
insurance company.
If families want to pay their nanny using childcare vouchers then the nanny has to become ‘registered’
childcare, and to do this they would need to take out a voluntary registration as a ‘Home Childcarer’ with
Ofsted. In order to be registered, a nanny has to hold public liability insurance.
Some nannies assume that because they are employed by the child’s parents they cannot be
sued for negligence. But this is not the case.
Public liability insurance covers nannies for anything happening to children in their care for which
they can be held legally liable. The definition of negligence, in legal terms, is a culpable omission of a positive duty. In a nanny’s role, it could be something as simple as the above case of a child being scalded by a hot drink, a
baby wriggling and falling off a changing table, or a toddler choking on something they should not have had access to.
If the nanny is considered to be negligent at the time the accident happened, she could find herself
having to pay damages for any injuries sustained.
Money is, of course, an issue, but public liability insurance isn’t very costly to arrange. It only
takes a few minutes and costs in the region of £60 a year. Once it’s set up, it will give you the peace
of mind of knowing you have protection, and, in addition, it demonstrates to an employer you
take a professional approach to your work.
Some nannies wrongly assume that because they don’t have much money, there wouldn’t be any point in someone suing them.
But in law, a child can make a claim for damages up until the age of 21, which is clearly years
after they have left the nanny’s care. In this time, a nanny’s financial circumstances might conceivably change dramatically.
You should check any potential insurance policy is on a ‘claims incurred’ and not a ‘claims made’ basis. A ‘claims incurred’ policy will cover you for any claims incurred during the period of insurance, whether the claim is made then or not. A ‘claims made’ policy will only cover you for a claim that is made during the actual terms of insurance – so if a child brings a claim against you years after the event, there’s no cover in place.
A good insurance policy will also provide legal expenses cover which would allow the nanny to request a legal representative to accompany her to the police station if she is questioned on allegations of child abuse or
neglect. Access to legal advice helplines can also give nannies peace of mind if they have any
employment of contractual issues.
A nanny’s own liability insurance is the responsibility of the nanny, but they should also enquire whether their employer
has adequate insurance. It is the law in the UK that anybody who employs someone must display a certificate of employers’ liability insurance in the workplace. An employer may already have it included within their household insurance package, and should be able to show proof of this to their nanny. Or they can take out standalone employer’s liability cover. Either way, nannies are well within their rights to request to see proof of their employer’s insurance.
Insurance is not just there to protect the parents or the nanny or even just the child – all parties benefit from being properly covered, and having access to the correct legal advice for example can help minor disputes from escalating. Accidents can and do happen, in the home, at the park and sometimes in the car and they can affect the nanny or the child equally. Insurance should be seen as a necessity for any childcare professional today.
By spending a few minutes sorting it our now, you could save unnecessary distress down the line.
Catherine Bates - Account Manager Nanny Department
Food poisoning and you - April 2013
We have a client who has been with us for 16 years. It is an immaculately run nursery, heavily oversubsribed with highly trained staff and outstanding Ofsted rating. Not a sniff of a claim - until last year, when the underwriters had to pay out over £26,000 following an outbreak of salmonella. Read more...
To understand why the settlement was so high requires an understanding of the peculiar presssures that insurance companies face in trying to defend negligence claims.
Infection cleared but...
In this particular instance salmonella was discovered in a child attending the nursery.
Subsequently, several other children reported the symptoms. The relevant authorities took over and the nursery was closed down while investigations were made.
Specialist cleaning was ordered for the toilets and kitchen; the small washable toys were put through the washer on the highest temperature and, within a very few days, the nursery was free of infection and reopened. Sounds good but..
Loss of revenue pay out?
Two aspects of cover would generally apply in the event of an outbreak of a disease at the premises that caused the nursery to be shut by the authorities. First, loss of revenue (Sometimes called business interruption). The scope of these sections of cover has narrowed in the last few years, following the bird flu scares.
The policies now tend to specify which diseases they will cover you for. Typically, they follow the list of notifiable diseases in the Public Health (Infectious Diseases) Regulations 1988: dysentery, food poisoning, meningitis, typhoid, tuberculosis, etc. In the event that your nursery is closed as a result of one of these occuring at the premises, then the loss of revenue section will pay out. Some insurers have introduced pay-out limits in the wake of the bird flu scares. Some insurers will limit the outbreak to the premises, while others will expand it out into a 25-mile radius around the premises.
Massive liability settlement
But in the case cited above, only about £10,000 of the £60,000 settlement was loss of revenue. The rest was liability. But how was the nursery liable?
Did it have poor hand hygiene practices? No
Did the nursery have poor food handling or food sourcing arrangements? No
Whose negligence?
The fact is that the majority of outbreaks of salmonella come from poor hand hygiene, not contaminated food. The virus can linger for some time on surface and, if hand hygiene is inadequate, there is a clear route of transmission.
The chances in this case were, therefore, that the salmonella was actually brought into the nursery by a child from outside, in which case the nursery could not possibly be found negligent.
The problem was that it proved impossible to identify the source of the infection and it was, therefore, impossible for the company to prove that negligence at the nursery wasn't the source of the infection.
In a court of law, the judge might accept that the nursery was not negligent... but there was an equally strong chance that the judge might find against the nursery. It is a familiar dilemma for insurance companies - fight the case and if they lose it will cost four times more than if they had settled. In the end, as they usually do, they settled.
This is not a counsel of despair - but it is a cautionary tale, demonstrating that even the best run nurseries can fall victim of unexplained events.
Jerry Beere - Director at Morton Michel Ltd
Reputational Risk - March 2013
You’ve build your business up over several years. You have a great reputation locally as a good, caring nursery that looks after the children well. You have a fantastic manager and your employees are well trained and professional; your administration is efficient and unobtrusive; your premises are clean and bright and stimulating; your Ofsted reports are excellent; the parents speak highly of you and would recommend you to their friends; the children are happy and thriving. This is your reputation; this is how you are seen. Read more...
So, how much is that reputation worth to you? Or, to put it another way, how badly would your business be affected it that reputation were tarnished by an incident? Imagine the following scenario, based on a true story of one of my clients. One of your children has a slightly stroppy dad. You’ve had a few words with him in the past but nothing too serious. Then, one day, the child manages to get out of the nursery unsupervised. Maybe a fire door was faulty; maybe someone propped a door open with a fire extinguisher. The child goes walkabout, wanders out down the road and onto the high street. Nothing bad happens but the child is found and the police are called. The police contact the father and the father contacts the local press. Next thing you know, you have a reporter outside the gates demanding to know how this could possibly happen; maybe the father is on local TV saying how shocked and disgusted he is. Other parents are wondering whether their children are safe with you. Your hard won reputation is in tatters.
What can you do about this? You need to talk to the press, maybe go on the TV. You need to reassure existing and prospective parents. You need to stop the rumours flying on Twitter. You need to be proactive. But you know nothing about these things.
If you have Reputational Risk insurance, sometimes called Crisis Containment, then you can begin to fight back against the negative coverage and take fast action to repair the damage. The cover pays the costs, up to a certain limit, of employing a PR firm to help you mitigate the risk of damage to your reputation. The PR firm will advise you on press relations, write and issue statements, help you with comments on Facebook and Twitter, even speak on your behalf if you wish. With their help, you can begin to put your side of the story over and stem the tide of negative publicity which is threatening to overwhelm you.
The cover is unlikely to be a blanket insurance, covering any threat to your reputation. For instance, it probably won’t cover a disgruntled parent mouthing off against you or disloyal staff who leave and set up a rival establishment opposite, trashing you in the process. Instead, the insurance will usually specify the circumstances in which the PR firm are engaged – for example, following injury to a child or employee; or allegations of abuse; or, as above, a child leaving the premises unaccompanied.
Crisis containment is a relatively new cover for nurseries and is likely to be an optional extra. But for a very modest additional premium, you could just find that, one day, it helps to dig you out of a hole.
Jerry Beere - Director at Morton Michel Ltd
