Risks of Insurance Company Instability

Insurance companies are state-regulated. When an insurance company is determined insolvent by the state, the mechanism to protect policyholders is called the State Guaranty Association System. All 50 states, the District of Columbia, and Puerto Rico have insurance company associations which help pay the claims of financially-impaired companies that operate in their respective states. Your state law will specify what types of insurance are covered and the dollar amounts of that coverage (see table below).  

There are many issues, too numerous to describe here, which determine the type and extent of coverage available in each state. You are advised to call the consumer affairs division of your state insurance department for further details about coverage in your state. Another source is the National Organization of Life and Health Insurance Guaranty Associations.

Limits to Liability under State Guaranty Associations 

For a detailed description of a particular state's coverage, click the state name link in the table below.