A state resident purchases an insurance policy from a non-admitted (unauthorized) insurer. If that insurance company subsequently becomes legally insolvent and cannot pay its obligations, how will the state Guaranty Association respond to the resident's unpaid claims?
- AIt will transfer the unpaid claims to a federal consumer protection program such as the FDIC.
- BIt will require the policyholder to pay a special assessment fee before releasing the claim funds.
- It will provide no protection, because the Association only covers policies issued by authorized insurers.Cevap
- DIt will pay the unpaid claims up to the state's maximum statutory limit.
Cevap
It will provide no protection, because the Association only covers policies issued by authorized insurers.
State Guaranty Associations are established to protect policyholders in the event of an insurer's insolvency, but this protection strictly applies only to policies issued by authorized (admitted) insurers. Because the policy in this scenario was purchased from a non-admitted insurer, the resident receives zero protection from the state association.
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Guaranty Association Coverage Limits for Unauthorized Insurers