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Does a guaranty fund pay all claims of an insolvent insurer?

No. The state insurance guaranty funds are designed as a safety net to pay certain claims arising out of policies issued by licensed insurance companies. They do not pay non-policy claims or claims of self-insured groups, first party claims by an insured or third party claims by a claimant against an insured that exceeds the ‘net worth’ provision of IC 27-6-8-11.5 (as of 7-1-2013) and IC 27-6-8-4 (before 7-1-2013) or other entities that are exempt from participation in the guaranty fund system.
In addition, some lines of business are excluded from guaranty fund coverage, such as surety bonds, warranty coverage and credit insurance. (Life and health claims and annuity claims are covered by the life and health guaranty funds, not the property and casualty system.)

Follow this link to the Indiana Life and Health Insurance Guaranty Association

http://www.inlifega.org/

Guaranty fund coverage is limited to insurers licensed to do business in the state of Indiana. (the members of the guaranty funds that, in turn, pay insolvency-related assessments.) When a licensed insurance company becomes insolvent, the guaranty funds pay eligible claims; but a company does not have guaranty fund coverage if it is writing non-admitted or unlicensed products, such as surplus lines or is a self-insurer covered in the non-admitted market.

A complete description of the types of claims covered by IIGA can be found at IC 27-6-8

A copy of the IIGA Act can be found in the News Page of this website. These limits on guaranty fund coverage are necessary to balance the need to provide a safety net to those who would be most harmed by the insolvency of their insurance company and keep the burden of providing the safety net at an acceptable level.



faq | by Dr. Radut