If you are sued because a child is injured, or becomes sick and the claim is covered by the policy, the insurance company will pay your legal defense costs. If you are found liable (negligent), it will pay the amount specified by the judgement up to the policy limit.
Lawsuits are unpleasant as well as expensive, and you need a lawyer to defend you. The best protection is the proper type of insurance, the kind of insurance that is specifically designed for family childcare. Unfortunately, not all childcare insurance policies are the same. It is important to look for a policy that provides the best coverage.