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What is a guaranty fund?

Property and casualty guaranty funds are part of a non-profit, state-based, statutorily-created system that pays certain outstanding claims of insolvent insurance companies. By paying these claims, guaranty funds, sometimes called guaranty associations, protect policyholders and claimants.

Guaranty funds are active in every state, the District of Columbia, Puerto Rico and the Virgin Islands. State laws require that licensed property and casualty insurance companies belong to the guaranty funds in every state where they are licensed to do business.

The Indiana Insurance Guaranty Association was created by the Indiana legislature in 1971 to provide a mechanism for the payment of covered claims under certain types of insurance policies to avoid excessive delay in payment and to avoid excessive financial loss to claimants or policyholders because of the insolvency of an insurer.

A guaranty fund system also exists for the life, health and annuity insurance industry; but it operates independently from the property and casualty system. This information concerns only the property and casualty guaranty funds. Please visit the Indiana Life and Health Insurance Guaranty Association website at for more information.

faq | by Dr. Radut