What is the role of the guaranty funds?
Guaranty funds ease the burden on policyholders and claimants of the insolvent insurer by immediately stepping in to assume responsibility for most policy claims following liquidation. The coverage guaranty funds provide is fixed by the policy or state law; they do not offer a “replacement policy.” By virtue of the authority given to the guaranty funds by state law, they are able to provide two important benefits – prompt payment of covered claims and payment of the full value of covered claims up to the limits set by the policy or state law.
