Guaranty Funds
In Indiana, some insurance policies are protected from whole or partial loss by guaranty funds. Guaranty funds operate something like the FDIC – covering a consumer’s losses up to a certain amount if the insurer is found to be insolvent and ordered into liquidation by a court. However, not all policies are covered by the guaranty funds, and consumers should always exercise prudence in selecting an insurance policy.
Consumer Alert
The Department of Insurance recently published a consumer alert regarding The Indiana Life and Health Insurance Guaranty Association (ILHIGA).
Limited Coverage
The amount of coverage provided by the guaranty associations generally depends on the type of insurance product. Basic coverage limits are:
- Life Insurance: $300,000 in death benefit and $100,000 in net cash surrender value per insured regardless of the number of policies you may have with the liquidated company.
- Health Insurance: $300,000 in health insurance benefits per insured regardless of the number of policies you may have with the liquidated company.
- Annuity Contracts: $100,000 in present value of the annuity benefits (including net cash surrender and withdrawal value) per annuitant regardless of the number of annuities you may have with the liquidated company.
- Property & Casualty Insurance: $100,000 per covered claim, up to $300,000 per occurrence
Life and Health Guaranty Fund
The Indiana Life and Health Insurance Guaranty Association, or ILHIGA, was created by the state legislature. The law governing the fund is found here: IC 27-8-8.
Insurance agents are not allowed to advertise the fact that a policy is subject to coverage by the guaranty association. That law is found here: IC 27-8-8-18(a).
Property and Casualty Guaranty Fund
The property and casualty guaranty association – known as the Indiana Insurance Guaranty Association, or IIGA – was also created by the state legislature. The law governing the fund is found here: IC 27-6-8.
Insurance agents are not allowed to use the existence of the Indiana Insurance Guaranty Association for the purpose of selling or soliciting the sale of any form of insurance covered by IIGA. That law is found here: IC 27-6-8-19.
For additional information on the Indiana Insurance Guaranty Association, what it covers, limits on coverage and other matters related to that Association please contact Jon Madsen at 317-692-0572 or jmadsen@quadassoc.org.
Guaranty Association Web Site
For a list of life and health insurance companies that have become insolvent, please visit the guaranty funds’ web site at: www.inlifega.org.
Questions regarding property and casualty insurance companies that have become insolvent should be referred to Jon Madsen at 317-692-0572 or jmadsen@quadassoc.org.
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