Commercial auto insurance for your nonprofit’s vehicles is a no brainer and required by law (at least liability coverage is).
Either your nonprofit owns vehicles, or it doesn’t.
Having insurance is one thing. Having the correct insurance to fit your needs and your risk tolerance is something else entirely.
For instance, I do not allow my clients to have less than $1,000,000 in liability coverage (although a few have been grandfathered in at $500,000). I’ve lost opportunities because of my stance. My risk tolerance on behalf of some of my prospects is much lower than theirs is apparently.
Some insurance agents are willing to offer coverage at state minimum limits on commercial vehicles. Personally, I believe that’s not the most responsible approach.
Commercial Auto Insurance Choices and Decisions
Nonprofit insurance markets offer a lot of options around their auto coverage. It would take a month of posts to exhaustively cover the topic.
Here are some of the main choices you’ll have to make.
As noted above, I recommend at least $1,000,000 (you can add an umbrella policy to give you even more coverage). Your state’s minimum limits vary, but most nonprofits will carry $1,000,000.
Physical Damage Coverage
Most clients want to cover their vehicles for physical damage. Comprehensive and collision coverage will be necessary for cars that are still under a lease or loan contract. And if a paid for vehicle has any value, most of the time you’ll want to have the coverage in place.
Your deductible will typically be in the $500 to $1,000 range.
Hired and Nonowned Liability
Many of my clients who don’t own vehicles will still carry this liability policy. It provides liability coverage for the nonprofit when an employee or volunteer is driving her own vehicle on behalf of the organization (nonowned liability). It will also provide liability coverage when driving a rented vehicle (hired liability).
This addresses miscellaneous exposures like driving for errands or transporting clients in a vehicle being used for the nonprofit but not technically owned by the nonprofit. This coverage is absolutely vital in my estimation. While the policy is geared to cover the nonprofit, there are policy endorsements that you can add to address the volunteer or employee who is doing the driving.
You’ll want to discuss every aspect of your auto liability exposure with your agent. If your nonprofit provides company vehicles to employees, you’ll want to discuss ‘Drive Other Car’ coverage.
If you rent a lot of vehicles, you might want to explore ‘Hired Car Physical Damage’ coverage.
Just make sure you discuss the way you use your vehicles and the resource for any transportation. You’ll want to make sure you’ve covered your bases.
Questions? Feel free to drop them in the comments below.