We formed and operate the first series LLC in Montana (named Aegis) for captive insurers. Several other firms provide key services such as accounting, audit and actuarial work. Please contact us at 832.330.4101 if you'd like to discuss forming a captive for your company.
The facts for this article are from the following case: Michigan Millers Mutual Insurance Company v, DG&G Co. 569 F.3d 808, (8th Cir. 2009)
DG&G was a Missouri company that ginned cotton which they delivered to Federal Compass. In December 2005, Federal noticed that DG&G’s product contained significantly more moisture than industry standards, leading several DG&G’s customers to demand payments for damages. The company directly paid $5.1 million after their insurer, Michigan Miller’s Mutual Insurance Company, denied the claim. The situation eventually devolved into litigation involving numerous parties.
DG&G had three insurance policies that they thought would pay for their attorneys and damages. They were wrong. Their commercial general liability policy excluded damages caused to property under the company’s care or control; the umbrella policy adopted all the CGLs provisions, so it provided no coverage. And the Agribusiness Policy contained an exemption for “defects, errors, and omissions” in the insured’s machinery. Unfortunately, the company argued mechanical problems caused the moisture problem as part of their case, preventing coverage under this policy. Despite having several insurance policies, DG&G had no coverage.
There are several ways a captive would have helped:
Please call us at 832.330.4101 if you'd like to learn more about how a captive insurance company would benefit your business.