Philadelphia Injury Attorney Blog

On September 15, 2008, many insurance companies had their assets battered on Wall Street. AIG, one the nation’s and world’s largest insurance companies, closed at $4.76, reaching a low of $3.50 from its yearly high at $70.13. Many of the Wall Street pundits were calling for the failure of AIG and other insurance companies who sought a lifeline for their survival. I myself was an AIG policyholder and switched to another insurance company earlier this summer as my gut recognized a financial crisis on the horizon. Today, we carefully analyzed all of our files where AIG was our opponent and fielded calls from several clients concerned about their insurance policies or their case’s financial fate where AIG was on the other side. At the time of this writing, I am not quite sure how AIG will ultimately fare in the financial markets. However, consumers should note that each state has a guarantee association in place to protect policyholders in the event of an insurance company failure.

Typically, if you have a claim filed with an insurance company that fails, the State Guarantee Association takes over the claim. If they have a claim and the insurance company is insolvent, the Guarantee Fund accepts the claim the way an insurance company would and they would do everything an insurance company would do said Roger Schmelzer, Chief Executive of the National Conference of Insurance Guarantee Funds, Inc. in Indianapolis. The Guarantee Fund steps into the shoes of the insurance company for claims paying perspective. The Pennsylvania Insurance Guarantee Association only protects Pennsylvania residents and property owners. Residents of other states or Pennsylvania residents owning property out of state are protected by other states Guarantee Associations. While the Guarantee Association payments are limited by statutes, which vary by state, most claims for policy benefits will be paid in full. Claims or policy benefits not paid by the Guarantee Association become claims against the liquidation estate. Most licensed insurance companies are required to belong to their state guarantee association that cover the lines of business that the companies write.