An 831(b) micro-captive insurance plan is designed to complement traditional insurance, not replace it.
While commercial insurance policies are essential, they often exclude, limit, or price out coverage for risks that are difficult to quantify, highly specific to a business, or operational in nature. These gaps can leave businesses exposed to losses that disrupt operations but fall outside standard policies.
An 831(b) plan allows businesses to insure these underinsured or uninsured risks through their own insurance company using properly structured, actuarially supported policies.
Common Risks Covered Through an 831(b) Plan
Policies may be written for a wide range of property and casualty risks, including:
- Business interruption and third-party business interruption
- Supply chain interruption and contract default
- Cyber liability and data-related risks
- Directors and officers (D&O), professional, and employer liability
- Key employee loss and dispute resolution
- Brand protection, recall, and reputational risks
- Deductible reimbursement and warranty-based coverages
- Tenant rent protection, accidental damage, and credit defaults
These policies address exposures that traditional carriers often exclude or limit, helping businesses better manage operational and financial risk.
A Strategic Layer of Risk Management
An 831(b) plan operates as a for-profit insurance company, processing legitimate claims and maintaining proper governance. When designed and administered correctly, it provides a strategic layer of protection between routine self-insured losses and catastrophic commercial insurance claims.