Types of Insurance
The risks that are assumed by the Captive should be “manageable” risks as opposed to “catastrophic” risks such as fire, theft, auto, workman’s compensation, health insurance, etc. which should be left with the commercial carriers because of their high level of exposure. However, the use of a Captive may allow you to increase the deductibles (a/k/a co-pays or self-insurance) on these policies in order to achieve cost saving from insurance policies already in place.
Examples of types of coverage commonly underwritten by a Captive include:
* Copyright or trademark infringement * Employment Practices
* Directors and officers liability * Loss of key customers
* Loss of franchise * Product liability
* Malpractice (in certain situations) * Structural defects
* Business interruption * Computer data loss
* Financial crime * Theft of intellectual property
* Adverse regulatory changes * Loss due to terrorist attack
* Computer software liability * Identity theft
All captive insurance coverage is issued on a “first-party insured” basis. Thus the operating company is the only party that can file a claim with the Captive, not clients, customers or patients. When a claim is processed, the proceeds are paid to the operating company, never to a third party.