A state guaranty fund is administered by a U.S. state to protect policyholders in the event that an insurance company defaults on benefit payments or becomes insolvent. The fund only protects beneficiaries of insurance companies that are licensed to sell insurance products in that state.

What type of insurance company is required to contribute to the guarantee fund in its state?

Insurers are required to participate in a state’s guaranty fund if they are licensed to do business in that state. An insurer licensed in all 50 states must participate in a fund in each of those states. Only licensed insurers are subject to the guaranty law.

What does admitted carrier mean?

An “admitted carrier” in California is an insurance company that has been filed and approved by the California Department of Insurance (DOI). This means they are subject to all state regulations, and cannot deviate from their filed rates.

What does the insurance Guaranty Association do?

What is an insurance guaranty association? Insurance guaranty associations provide protection to insurance policyholders and beneficiaries of policies issued by an insurance company that has become insolvent and is no longer able to meet its obligations.

What is the current limit of the guarantee fund?

$300,000
By statute, guaranty funds are limited in the amount they can pay to the amount of coverage provided by the policy or the legal limit (commonly $300,000), whichever is less, Schmelzer said.

How do I know if my insurance carrier is admitted?

Go to and type the company name and hit search. When you find the company click the link. On the next page it will tell you next to “Company Type” if the company is “Surplus” or “Property and Casualty Insurer” which means admitted.

What does it mean to be an admitted insurance company?

An admitted company is an insurance company that is domiciled in one state but is admitted by another state to transact insurance business. more Insurance Guaranty Association Definition

What happens when a state guarantee fund takes over an insurance policy?

When a state guarantee fund takes over an insurance or annuity policy, it will be subject to the coverage limitations set by each state. In Florida for example, the limits for life insurance and annuity benefits are as follows: Cash Surrender: $250,000 for deferred annuity per contract owner

Why are insurance companies required to belong to state guaranty associations?

Insurance companies, which issue annuities, are legally required to belong to their particular state’s guaranty association. The safety of investments is paramount to consumers. When Americans entrust their savings to money in federally regulated banks, their deposits are insured by the Federal Deposit Insurance Corporation.

Can a non-admitted insurance company transact business in your state?

If a policyholder thinks his or her case was mishandled, there is no recourse available to the state insurance department. Many states allow non-admitted carriers to transact business in their state if there is a special need that cannot or will not be met by admitted carriers.