Captives and the "Business Risk Doctrine"

For over a decade, construction businesses of all sizes readily have used captive insurance companies as an important part of their risk management program. For many companies, one key benefit that captives offer is their ability to take standard insurance policy forms and tweak them to broaden coverage in important ways. Sometimes, however, the ability of the captive to broaden coverage is restricted by the ability to get commercial reinsurers to back the insurance program and the enhanced policy wording. That said, it is common for construction industry captives with sophisticated professional guidance to obtain adequate reinsurance for manuscripted policy wordings, so long as those wordings generally align with the coverage afforded by commercial insurance companies and recognized by the courts that interpret those policies.