Business Owners- Get Better Business Protection with Unique Tax Benefits
Risk protection is an important and necessary expense for all business owners. Every business owner we meet has property and casualty coverage to protect their business. Most standard policies include general liability, workers comp, auto and property coverage.
At Advanced Wealth Preservation, we teach business owners three things about their P&C coverage.
- How to more efficiently pay their existing commercial coverage by looking at their deductibles and exemptions.
- How to insure up to 69 additional risks not covered by their commercial lines of coverage.
- Explain how 92% of Fortune 500 companies self-insure…and how they can too.
Business self-insurance is known as Captive Insurance. Fortune 500 companies have been self-insuring for over 50 years. One of the earliest and best known captive insurance companies is AllState. Allstate started out as Sear’s captive insurance company before later becoming a separate company.
You see other examples of corporate self-insurance every day. You see it when you write a check to insure a Federal Express package, UPS shipment, extended warranty on your car or extended guaranty at Best Buy. That insurance check does not go to State Farm, Prudential or any other commercial insurance company. It goes to Fed Ex’s, UPS’s, GM’s or Best Buy’s self-owned insurance company.
Fortune 500 companies have used captive insurance companies for years now to insure the risks of the parent company and its subsidiaries. In the early days most captive insurance companies were set up in Bermuda due to cost. In 1974 Colorado was the first state to pass legislation that allowed captive insurance companies to be domiciled domestically.
Fast forward to today where 40 states now actively compete with one another for captive insurance business. The good news is state competition has driven down the costs of owning a captive insurance company and there has never been a better time to self-insure than today.
Congress is also encouraging small and middle market owners to self-insure for improved risk protection for their business. Examples of self-insured risks include:
- Cyber Risk
- Business Interruption
- Product Liability
- Legal Defense
- Supply Chain
- Virus Losses
- Force Majeur (i.e. Hurricane and floods)
- Key Customer Loss
- Loss of Key Employee
There are also wonderful tax benefits that come with self-insurance, however, there has to be a real need for self-insurance before one can look at any tax benefits.
Captives are complicated and should be created and reviewed by competent tax lawyers, actuaries and CPA’s. At Advanced Wealth Preservation we work with some of the country’s most experienced captive insurance experts so you and your business keep compliant with captive laws and regulations.