The Nonprofit Insurance Crisis: What You Need to Know and How to Respond

TrudyS
Nov 30, 2025
3 min read

Updated: Nov 30, 2025

If your organization's insurance premiums have skyrocketed recently—or worse, if your carrier has dropped you entirely—you're not alone. Nonprofits across the United States are facing an insurance crisis that's threatening their ability to keep their doors open and serve

their communities.

The Numbers Are Alarming

Insurance costs aren't just rising—they're exploding. Organizations are seeing premium increases of 15-30% annually, with many experiencing much steeper jumps. According to a 2025 national survey, nonprofits have experienced an average premium increase of 163% since 2019, with some facing increases between 200-1800%. Even more concerning, these increases are hitting organizations regardless of their claims history or operational changes.

One church administrator in Ohio saw her annual premium jump from $17,000 to over $60,000 after being dropped by her previous carrier—despite never filing a claim.

Why Is This Happening?

The crisis isn't because nonprofits have suddenly become riskier to insure. Instead, several systemic forces are converging:

Climate Volatility and Reinsurance CostsT

he insurance industry has faced over $100 billion annually in losses from natural disasters for the past seven years. Even if your organization isn't in a high-risk area, you're affected because insurance carriers rely on reinsurance to manage their own risk. When reinsurance costs rise, those expenses cascade down to policyholders everywhere.

Social Inflation

Legal and societal dynamics are driving up liability claim costs dramatically. Juries are awarding larger verdicts, liability laws are expanding, and litigation around abuse, discrimination, and negligence is increasing. According to Blue Avocado, the average cost to resolve claims increased 80% from 2019 to 2024. Nonprofits serving vulnerable populations—children, seniors, individuals with disabilities—face particular risk, even when they've done nothing wrong.

COVID-19 Legacy Effects

The pandemic created a surge of employment practices lawsuits from wrongful termination claims, flooding insurers with cases that continue to impact their bottom lines and reverberate through premium calculations.

Workforce Shortages

Staff shortages mean overburdened workers, which increases the likelihood of incidents that can result in liability claims—creating a vicious cycle for already-struggling organizations.

The Real-World Impact

These aren't just numbers on a balance sheet. Organizations are being forced to:

Reconsider or reduce services
Cut programs and staff
Delay expansions
In some cases, close entirely

The crisis is particularly acute for nonprofits providing foster care, mental health treatment, substance use recovery programs, elder care, and affordable housing. Commercial insurers are dropping these providers in droves, forcing them into the surplus lines market where premiums can be double or triple what they previously paid.

What Can You Do Right Now?

While you can't control the global insurance market, there are strategic steps you can take:

1. Start Renewals Early

Begin your renewal process 60-120 days in advance. With fewer carriers and longer underwriting cycles, waiting until the last month drastically limits your options.

2. Get a Policy Audit

Work with a broker who understands the nonprofit sector to review your coverage. Are you over-insured on asset values? Do you have gaps in cyber liability or sexual misconduct coverage? Has your organization's mission evolved?

3. Explore Group Purchasing

Group insurance programs can provide 15-20% savings while maintaining coverage levels. The Community Purchasing Alliance and similar cooperatives give nonprofits collective bargaining power.

4. Choose the Right Broker

Find a broker who acts as your advisor, not just a salesperson. They should be transparent about exclusions, willing to explain trade-offs, and honest when your current policy is still your best option.

Looking Ahead: Systemic Solutions

Addressing this crisis long-term requires sector-wide action. Social Current proposes several policy solutions:

Creating public or captive insurance funds specifically for high-risk service providers
Federal mandates requiring states to provide affordable liability insurance options
Shared insurance pools allowing nonprofits to purchase coverage collectively

The Nonprofits Insurance Alliance has also called for a transformative $100 million foundation investment to help stabilize the market for tens of thousands of organizations for decades to come.

The Bottom Line

The insurance crisis facing nonprofits is real, urgent, and not your fault. But understanding the forces behind it and taking proactive steps can help protect your organization. Start your renewal process early, audit your policies, explore group options, and connect with other nonprofit leaders facing similar challenges.

Most importantly, don't wait until renewal time to think about insurance. The organizations that weather this crisis best will be those that treat insurance as a strategic priority, not an afterthought.

Your mission is too important to be derailed by insurance challenges. Take action now to protect it.

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