What is the difference between captive and excess insurance?

Captive insurance and excess insurance are two types of insurance that are important to understand in the context of California insurance regulations. Captive insurance is a type of insurance policy in which an individual or company is both the insurer and the insured. This type of insurance allows companies to insure their own risks without having to go through a third-party insurer. This is especially beneficial for companies who have difficulty getting traditional insurance to cover their risks. Excess insurance, on the other hand, is a type of insurance that kicks in when the primary insurance coverage runs out. This type of insurance is usually used to provide additional coverage for certain risks that are not covered by the primary insurer. For example, if a company has a primary insurance policy with $500,000 in coverage for liability, they could purchase an excess insurance policy to provide an additional $2 million in coverage. In California, insurance regulations require businesses to have enough coverage to protect their assets, and any potential risks associated with their business. Captive insurance and excess insurance are two types of insurance that can help companies meet these regulations. Captive insurance allows companies to insure their own risks, while excess insurance provides extra coverage when the primary coverage is not enough. Both of these types of insurance are important considerations for businesses operating in California.

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What is the difference between captive and excess insurance?

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