What is a Guaranty Fund or Association?
All 50 states, Puerto Rico, the U.S. Virgin Islands (Property and Casualty only) and the District of Columbia have a “safety net” in place for the payment of covered claims arising from the insolvency of an insurer licensed to do business in that state or jurisdiction. Normally, for property and casualty business they are referred to as “Guaranty Funds” and for life and health they are typically referred to as “Guaranty Associations.” Five states provide a guaranty mechanism for HMO’s. In the case of life/health insurance, the Guaranty Association also provides for the continuation of eligible contracts that would otherwise terminate because of the insolvency. Coverage may vary slightly from state to state. You should contact your state’s Guaranty Fund or Association to determine whether it provides coverage as a result of the liquidation of your insurer and, if so, the level of coverage provided.
