We speak with many nonprofits that want a ballpark premium estimate for their insurance or an endorsement. Unfortunately, this is next to impossible for us. While sometimes we provide very rough ballpark estimates for things based on our experience the actual premiums have to be determined by underwriters. There are many factors that go into determining what your nonprofit insurance program will cost.
Primary Premium Drivers:
1) Type of Coverage - Different types of coverage have different facts that determine rates.
- If you purchase General Liability for an Animal Shelter the premium is based on the number of Kennels and Foster homes. While if your organization is an after-school program or focused on youth the premium is based on the number of kids served annually, While if your organization is a food bank the premium is based on the number of meals served and where they are served. So, the base rates that determine your premiums are completed dependent on the types of operations your nonprofit is engaged in.
- If you purchase Auto coverage the premium is based on the type of vehicle, age of the vehicle, full or partial coverage, limits of coverage, etc.
- If you purchase Nonprofit Professional Liability the premium is based on the number of professionals and what they are doing.
I could go on but I think you get the picture. The factors are endless and it can get fairly complicated fairly quickly.
2) Risk - Different types of organizations have different risks. For example, a homeless shelter would generally be considered risker to insure than a counseling center. And, a theater maybe is considered to have more risk than a traveling choral group. The underwriters factor in the risk that they perceive your organization to have relative to other organizations. In other words, how likely does the underwriter think it will be that you will have a claim based on actuarial evidence. The risk factor they determine is applied to the base rates for your type of organization.
3) How Much You Need - More costs more. Obviously, if you buy higher limits of coverage the cost of that coverage will be more regardless of which coverages you are purchasing to protect your nonprofit. There are a lot of things that go into determining appropriate insurance limits such as the size of an organization, types of board members, contract requirements, etc.
So, there's a lot more to determining your overall premiums than meets the eye. The important thing is to discuss these factors with your broker so that you can achieve the best level of protection possible but not blow up your budget.
Don't fret, your broker will be able to walk you through all of the coverage and premium nuances so that you don't have to be aware of and understand every little factor. Just be aware of the various factors and ask any questions you may have about how it all works.