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.

Limited Coverage

The amount of coverage provided by the guaranty associations generally depends on the type of insurance product.  The coverage limits listed below for life insurance, health insurance and annuities apply only for companies placed in rehabilitation or liquidation on or after January 1, 2013:

Life Insurance

• $300,000 in death benefits
• $100,000 in cash surrender or withdrawal values

Health Insurance

• $500,000 in basic hospital, medical and surgical or major medical insurance benefits
• $300,000 in disability and long term care insurance
• $100,000 in other types of health insurance

Annuities

• $250,000 in present value of annuity and structured settlement annuity benefits (including cash surrender or withdrawal values)
• $5,000,000 for covered unallocated annuities issued in conjunction with a benefit plan

The maximum amount of protection for each individual, regardless of the number of policies or contracts, is $300,000.  Special rules may apply with regard to basic hospital, medical and surgical or major medical insurance benefits.

Property/Casualty Policies

The coverage limits listed below for property and casualty insurance apply only for companies placed in rehabilitation or liquidation on or after July 1, 2013: 

• $300,000 per covered claim
• Unlimited coverage for workers compensation

All claims of any kind that arise out of or are related to the bodily injury or death of one person constitute a single claim regardless of the number of claims made or number of claimants.

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).

Questions regarding life and health insurance companies that have become insolvent should be referred to Steve Michaels at 317-692-0562 or smichaels@quadassoc.org

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 Rick Vasil at 317-692-0557 or rvasil@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:  http://www.inlifega.org/