Is a Captive Insurance Company Right for My Business?

Admin@ | February 15, 2019 | 0 | General

When it comes to business costs, one of the higher annual payments goes to insurance companies. The fees tend to increase year after year, even if your business has never had a claim or reason to use it. However, the insurance company needs to cover its losses, costs and fees, so it passes these on to you, the consumer. A solution to this is just gaining some steam: a captive insurance plan. What is this new way of doing things and can it work? 

What Is a Captive Insurance Company?

You may know some businesses that are self-insured, but you aren’t keen on doing much digging on that route. However, you have heard of captive insurance companies, but you are not too sure what they mean. In a captive insurance company, the insured, or you, own your insurance. You are theoretically self-insured. However, you pay a third-party to put together and administer the policy. All the money stays put for your business’ use.

What Are the Benefits of a Captive Insurance Company?

When it comes down to it, the biggest benefit to utilizing a captive insurance company is you get to pick and choose exactly what coverage you want. Instead of being presented with three options, each of which is filled with hundreds of sub-options, clauses and loopholes, a captive allows you to choose everything you need by price. This method is called “unbundling” because you pull apart a traditional policy and get down to what matters to your business needs.

Will You Save Money With a Captive Insurance Company?

The answer to this is trickier, but if you continue along with either few claims or no claims, the captive insurance may wind up saving you money. Your rates will not increase under the same circumstances at the very list. If they start to edge up, you can always go back through, review your coverage and make adjustments.

Insurance is a necessity, but it can be an absorbent amount of money. Free up some of your cash flow and check to see if captive insurance is better for your bottom line.

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