What is an insurance asset

Insurance becomes an asset when you experience a risk covered in your insurance plan, which activates your coverage, allowing you to make a claim and receive a successful payout. You may wonder if making claims will cause you to lose out on future earnings.

What type of an asset is insurance?

Insurance that is paid in advance is considered as a prepaid expense under the current asset in the balance sheet of the company. Once the insurance amount becomes due it is considered an expense.

Is insurance an expense or an asset?

All policies come with premiums. If they expire, they must be recorded as an expense. Unexpired premiums should be listed as prepaid insurance, which is listed in an asset account.

What are examples of assets?

Assets include physical items such as machinery, property, raw materials and inventory, and intangible items like patents, royalties and other intellectual property.

Are insurance current assets?

Insurance companies carry prepaid insurance as current assets on their balance sheets because it's not consumed. When the insurance coverage comes into effect, it goes from an asset and is charged to the expense side.