In Hawaii, all businesses are required to purchase commercial coverage when their property is financed. It is recommended that the company purchase and use liability coverage. However, the combined costs of insurance are overwhelming for some companies, and they need an alternative. A captive insurance attorney in Honolulu, HI can explain better practices for managing liability coverage and staying within budget.
What Does Captive Mean?
Essentially, the business establishes a captive insurance company to become self-insured. All premiums are saved instead of paid to a traditional insurer, and the money is used if the business loses a legal claim. The funds are invested in the company’s insurance entity, and the company won’t lose money.
Why Does Business Need a Captive?
The captive offers coverage for risks that aren’t covered completely through a traditional lender. The insurance company covers only certain risks, and claims are required for processing and distributing the funds. The company is required to maintain commercial insurance, such as global or general liability coverage for more significant losses. The captive is essentially a backup plan for the company if the lawsuit losses are too high.
How Does the Captive Protect the Company?
The captive offers assistance for higher than average income tax payments and helps the company manage tax liens. Business owners use the captive when creating an estate plan for the company and protecting certain assets for their heirs.
What Are the Major Benefits of the Captive Insurance Company?
Companies lower their total costs for insurance coverage and maintain more cash flow. The company has more access to capital to reinvest into new markets and protect their assets. It is also possible for the owner to defer their tax payments and save more when filing their income taxes.
In Hawaii, all businesses need liability coverage to protect the company against unforeseen events. A captive insurance company is created to manage coverage for additional lawsuit losses and common liabilities. It also protects them against excessive income tax liens and helps with estate planning practices. Businesses that want more information can contact a captive insurance Attorney in Honolulu, HI through Goodsill Anderson Quinn & Stifel or visit goodsill.com right now.
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