This paper analyses insurance as an expense item and includes commentary under the following headings:
- Insurance Premium Notice
- Insurance Cover Summary
- Insurance Allocation
- Premium Funding Companies
It also includes an example of an Insurance Cover Summary to assist management to ensure that every asset has been appropriately covered and that every risk is analysed to determine whether an appropriate cover has been affected.
The allocation of insurance within the departments of the business is also considered, as is the use of premium funding companies for the payment of the annual insurance premium with the business then making monthly payments of the premium. The paper also suggests monthly journal entries for the recording of the insurance cost into the business' Profit & Loss Accounts.
