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What happens if my insurance company fails?

Other Money & Debt Issues

This article provides information on what to do if your insurance company fails, as well as other information. This article was provided by the Texas Department of Insurance.

If my insurance company fails

Like any other business, an insurance company can have financial problems and be unable to meet its financial obligations.  Most insurance companies licensed in Texas are members of a guaranty association. Guaranty associations help pay claims for their member companies that fail. 

Texas has three guaranty associations:

  • The Texas Life and Health Insurance Guaranty Association covers life insurance, health insurance, and annuities. For more information, visit txlifega.org.
  • The Texas Property and Casualty Insurance Guaranty Association covers homeowners, auto, and workers' compensation insurance. For more information, visit tpciga.org.
  • The Texas Title Insurance Guaranty Association covers title insurance and escrow shortages. For more information visit ttiga.org.

In addition to the guaranty associations, Texas has a Self-Insurance Guaranty Fund and a Self-Insurance Group Guaranty Fund. These funds cover workers' compensation benefits provided by self-insured employers and groups. 

Health maintenance organizations (HMOs), surplus lines carriers, and multiple employer welfare arrangements don’t have guaranty associations. 

Guaranty associations

Licensed insurance companies must be a member of a Texas guaranty association. If you buy life or health insurance or annuities, you will get a summary of the coverage through the Texas Life and Health Insurance Guaranty Association.

If any insurance company or HMO isn’t a member of a guaranty association, the policy must say that it isn’t covered by a guaranty association.

Covering Claims

The guaranty association will pay claims for its members who become insolvent. Some claims have dollar limits or other limitations, which vary by type of insurance. This means that only some of your claim might get paid. There’s no dollar limit for workers’ compensation claims.  

If your claim isn’t covered by a guaranty association, or is only partially paid, you might be able to file a claim with the receivership of the insurance company. If your company is in receivership, the receivership will send you a notice of the claims process. This information will also be on the receivership’s website.

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