As you look through your options to contain your risk and expenses, don’t overlook captive solutions. A lot of companies disregard captives, assuming that their business would be a poor fit. Unfortunately, many of these companies believe in the myths surrounding captives. Here are a couple of those myths debunked.
You Can’t Cover All Business Risk
In general, you do choose captives to cover risks that are not associated with traditional insurance. For example, warranty programs, loss of customers and patent infringement. However, you can also use captives in a more broad sense. Any risk to your company can have coverage.
You Pay Too Much for Captives
When you look at the costs of captive insurance, you may be intimidated by it at first. After all, you have management fees, LLC costs, reserve funding and more. However, you need to keep in mind that captives are part of a long-term strategy.
Captive solutions can be extremely beneficial to companies of all sizes with a variety of risk mitigation needs. To ignore captives could result in you paying too much for your insurance coverage. While large businesses tend to dominate captives, you don’t have to be a Fortune 1000 company. Businesses that generate as little as $150,000 in insurance premiums can easily use captives.