Understanding What Captive Insurance Is and Why Your Business Needs It

Do you own a business insurance policy? Maybe you run a business that insurance companies often avoid insuring or charge insane premiums. If this sounds familiar, it may be time to consider captive insurance.

You may have heard about this type of insurance, but think it’s only available for large companies.

While it may cost a pretty penny to open a captive insurance company, it might be the best option to insure your business. Want to learn what’s all the buzz about this type of insurance?

We’ve got you covered. We’ll discuss the basics you should know about captive insurance companies and why you should consider it. Read on for your guide to obtain the best insurance coverage for your business today!

What Is Captive Insurance?

Depending on your industry, your company may be at risk of suffering huge losses due to product liability, malpractice, or other costly claims. More often than not, traditional insurance carriers won’t cover these claims.

However, captive insurance would cover these claims. This type of insurance is the protection or coverage provided by a subsidiary to its parent company.

The parent company will pay its insurance premiums to the captive insurance company or subsidiary. Let’s say you own a medical practice and one of your patients sues your firm for medical malpractice.

If you had captive instead of traditional insurance, your insurer would cover the claim.

Remember the parent company controls the approval and funding of the claims. Contrarily, a traditional insurance company may only cover a portion of the claim. You would have to pay any additional costs.

Why Should You Consider Opening a Captive Insurance Company for Your Business?

Opening a captive insurance company may seem like too much work and expense.

It’s the best way, however, to ensure your assets and company are protected against any type of claim.

Still unsure why you should consider this type of insurance? Here are two reasons why you should open a captive insurance company today.

Comprehensive Coverage

Traditional insurers tend to cover only certain damages or injuries putting high-risk industries in jeopardy of huge insurance claim losses.

When you open a captive, you’ll be able to expand your insurance coverage to protect your business assets in any situation.

Customized Insurance Options

Expanding your coverage isn’t the only way captives benefit parent companies. You’ll also be able to customize the terms and conditions of your insurance policy.

These customizations will allow you to set parameters in your business to minimize losses and understand the factors that give rise to claims.

You Learned the Basics About Captive Insurance – Now What?

It may seem easier to stick to your current insurer or keep operating without an insurance policy. However, protecting your business assets is vital for risk management and long term growth.

Captive insurance may be the easiest and safest way to obtain comprehensive insurance coverage. To establish the best captive insurance company, it’s important to consult an expert that specializes in this type of insurance.

A good starting point is searching online for the term “captive insurance expert near me.”

Consider companies with experience establishing captives for other companies in your industry. Don’t wait until your company is sued and start protecting it today.

Did you find this article interesting? Keep checking the rest of our site to find more tips and articles to start growing and protecting your business today.