A captive insurance company is a firm that is owned and controlled by the entities it insures. There are two main types, pure captives, which are completely owned by the insured, and sponsored captives, which are owned by third parties that are not connected to the insured. A sponsored captive may be a rental captive, in which unrelated insureds can use the company. A protected cell captive is a type of rental captive that has certain advantages.

Protected Cell Captive

In a protected cell insurance captive, the rental captive will have a separate account underwritten for each insured participant. This provides protection as each account or cell has its own assets and liabilities and no individual account is legally responsible for any other account. This removes the risk of sharing assets with all of the insured and also of being named in any legal actions. If a cell were to be liquidated, there would still be no legal action against the other cells.

Advantages of a Protected Cell Captive

A protected cell captive has lower start-up and administrative costs and is easy to get set up and also to end. It allows a company to have control over its own insurance and a greater ability to manage risk.

Your company may be best suited by a protected cell insurance captive. Research this option and decide if it’s the one for you.