Legal Definitions - captive insurer

A captive insurer is a type of insurance company that provides coverage for the liabilities of its owner. The owner is usually the sole shareholder and the only customer of the company. This type of insurer is also known as a captive insurance company.

For example, a largecorporation may create a captive insurer to provide coverage for its own risks, rather than purchasing insurance from a third-party insurer. The captive insurer can tailor its policies to the specific needs of the corporation and potentially save money on premiums.

Captive insurers are often used by companies in industries with high risks or unique risks that are not well-covered by traditional insurance policies. By creating their own insurance company, they can have more control over their coverage and potentially save money in the long run.