What is insurance expense in Accounting

What is Insurance Expense? Insurance expense is the amount that a company pays to get an insurance contract and any additional premium payments. The payment made by the company is listed as an expense for the accounting period.

What type of expense is insurance expense?

What is Insurance Expense? Insurance expense is that amount of expenditure paid to acquire an insurance contract. This expense is incurred for all insurance contracts, including property, liability, and medical insurance.

Where is insurance expense in accounting?

Insurance expense will be one of the categories that your income statement lists as an expenditure. Because the income statement reflects business activity over a period of time, this line on your income statement will aggregate any insurance payments your business made during the period that the statement covers.

Is insurance an expense or an asset?

Insurance is an expense to a business and is carried as prepaid expense (paid in advance) under the head of current assets in the balance sheet of a company till it is paid. Asset refers to the amount one invests in resources, in order to earn value overtime on their invested amount.

How do you record insurance expenses?

At the end of any accounting period, the amount of the insurance premiums that remain prepaid should be reported in the current asset account, Prepaid Insurance. The prepaid amount will be reported on the balance sheet after inventory and could part of an item described as prepaid expenses.