By Craig Price
Founder
Administrative Cost Reduction Experts (ACRE)

There’s been a lot of news about rising nonprofit insurance costs this month. Most concerningly, HOURCAR, a Minnesota nonprofit carshare network, announced it is terminating operations due largely to higher vehicle insurance costs.

In fact, a new analysis from global insurance brokerage Gallagher’s 2026 Nonprofit Sector U.S. Property and Casualty Insurance Market Update showed commercial auto insurance rates for nonprofits are up 7%-15%.

It’s Not Just Auto

Nonprofits have been hit hard in recent years by premium hikes in other insurance lines, as well.

Last year, in a survey of more than 300 child and family-serving organizations across 46 states, respondents reported an average increase in liability insurance premiums of 163% since 2019.  

Earlier this year, the Georgia Center for Nonprofits surveyed 322 Georgia nonprofits. The survey found that liability and professional insurance was their fourth highest cost concern, behind only wages, health insurance, and program delivery costs.

“It doesn’t feel like there’s a lot of security in the market for nonprofits,” Pamela Davis, CEO of the Nonprofits Insurance Alliance told Insurance Business magazine. “It’s just been a tough market overall and continues to be a tough market for nonprofits.”

So What’s Happening? And is There an End in Sight?

“Gallagher’s 2026 view is best described as selective relief, not a uniformly soft market,” Gallagher Risk Management Advisor Colin D’Arcy told ACRE. “The broader US property and casualty market is softening, particularly in property, and many nonprofits are seeing some reprieve after roughly five years of steep insurance cost increases.

“Outcomes remain uneven, however. Youth-serving organizations and nonprofits serving vulnerable populations still face affordability and access challenges.”

A report this month in The Nonprofit Guide noted that the two IRS nonprofit activity code classifications with the highest combined insurance premiums (not including health insurance) were nonprofits in public safety (median premiums at $22,700, accounting for about 5.5% of their budget) and housing (median premiums of $17,435, more than 3.6% of total annual spending).

“The top two are not close calls,” the report states.  “Public safety organizations run vehicles, equipment and people into emergencies, and vehicles are the one exposure that volunteer protection law expressly leaves out. Housing organizations have tenants, and tenants are people on premises the organization is responsible for. Both spend between two and four times the median for their size.”

Size Matters But Type Matters More

D’Arcy echoes the point that while the size of the nonprofit can impact premiums, the bigger factor is the type of nonprofit. “Underwriters will focus on the population served; the amount of direct care; fleet, property and catastrophe exposures; jurisdiction; loss history; and the quality of documented controls,” D’Arcy told me.

According to D’Arcy, in addition to auto insurance, other lines frequently used by nonprofits that have seen the largest premium increases in recent years include Casualty and umbrella/excess and sexual abuse and molestation insurance.

On the flip side, he said cybersecurity insurance is “a buyer’s market for many nonprofits,” with the premium change outlook in the 0 to -5% range.  He also mentioned that Directors & Officers and Employee Practices Liability Insurance are seeing “mostly flat renewals and some single-digit decreases. Although a report by Kiplinger projected D&O insurance rates for nonprofits in 2027 to “be flat to up to 5% higher.”

What to Do If Insurance Rates are Eating Up Too Much of Your Budget?

D’Arcy says, “The strongest approach is to manage the total cost of risk. In the current selective market, organizations that document strong controls, transparent governance and measurable improvements are best positioned to convert added capacity into better terms and a lower total cost of risk.”

For example he says, “For youth-serving and vulnerable-population organizations, focus on activity vetting, screening, training, supervision, reporting, response and management oversight. Policies should be embedded in culture and applied to employees, volunteers, contractors and third parties.”

D’Arcy also added that nonprofits are best served if they are proactive and transparent with their insurer when they have a claim, explaining any losses and any corrective action taken as a result.

For more resources to help your charitable organization or association reduce purchase expenses and excess operating costs in new and meaningful ways, visit Administrative Cost Reduction Experts at https://ACREcutsCosts.com.