Insurance and Financial Stress on Non-Profits

It’s not very often that you see the connection between insurance rates and non-profit leadership. However, that seems to be exactly what’s happening. Insurance Business Magazine recently wrote an interesting article, from March 23, 2021, speaking about how non-profits are beginning to struggle with purchasing insurance. And they give specific examples.

One area of concern is auto insurance. This has very little to do specifically with a non-profit and much more with cultural financial norms in our society. A simple fender bender might result in great liability for someone’s hurt back or neck—or just the legal fees and settlements that are all too common. This has caused auto insurance rates to rise dramatically over the last 15 to 20 years - at a much higher rate, as a matter of fact, than in the average growth of most non-profits. This is causing financial strain and stress.

Another coverage issue deals with general liability insurance. Because of the tragic and beyond unacceptable issues of churches or the Boy Scouts, the cost of general liability insurance, and general umbrella policies, has gone up exponentially. The payouts, based on the last decades plus revelations, have challenged some non-profits that provide services for youths to afford general liability insurance at all.  Then, in turn, that puts pressure on insurance around director and officer’s liability (d&o) and basic employment practices liability insurance.

In the end, this just makes running a nonprofit more expensive.

Nonprofit leaders, and the budgets they manage, are going to have to absorb these challenges. The cost is not just dollars, but in the lives that were horrifically affected, and the overall trust the non-profits might’ve lost by not taking care of those they were supposed to serve.