Guaranty Fund Advisory

In most cases of insurance company insolvency, a safety net in the form of a “guaranty association” provides protection to Vermont’s insurance consumers. Vermont has two such associations:  one for property and casualty insurance, and another for life, accident and health insurance (one product class), and annuities. An insurance company’s failure may cause extreme hardship to policyholders and other claimants.  To ease this hardship, all states, including Vermont, have insurance guaranty associations.  All insurance companies licensed to issue coverage in Vermont must belong to a guaranty association that protects the kinds of insurance written by that company – with the exceptions prescribed by law that include coverage provided by HMO’s, hospital/medical indemnity insurers (Blue Cross & Delta Dental), authorized surplus line insurers, title insurers, mortgage guaranty insurers, sureties, fraternal organizations, etc.

(Is your insurer licensed in Vermont?  Click here to check).

The guaranty associations pay valid claims of policyholders and certain other claimants, up to the dollar limits of the policy, subject to the provisions of the contract and dollar limits fixed by law.  Generally, money to pay claims, administrative costs and other guaranty association obligations are raised by mandatory “assessments” on insurance companies licensed to issue the same kinds of insurance as the insolvent company. Assessments are limited to 2% of a years total premium. After a court declares an insurer insolvent and orders it liquidated, assessments can be collected and valid claims can be paid by a guaranty association.

Guaranty association information specific to types of insurance

Life, Annuity and Health Contract Coverage:

For general information and responses to frequently asked questions:

Go to or contact Bill Callnan, Fund Administrator, at 802-244-8540

In general life, annuity and health guaranty association provides the following coverage:

  1. Life Insurance Death Benefit: $300,000 per insured life
  2. Life Insurance Cash Surrender: $100,000 per insured life
  3. Health Insurance Claims: $500,000 per insured life
  4. Long Term Care and Disability income: $300,00 per insured life
  5. Annuity Benefits (Present Value): $250,000 per contract owner
  6. Unallocated Group Annuity Benefits: $5,000,000 per contract owner

Property and Casualty Contract Coverage:

For general information:

Go to and or call GFMS, 800-852-2003

In general and subject to the related statute, property and casualty guaranty association coverage is limited as follows:

  1.  All claims are subject to the terms and conditions of the insurance policy and must be reduced by all other applicable policy coverage.
  2. Most claims – the lesser of the policy’s limits or $300,000 if incurred within 30 days of the insurer’s court ordered liquidation.
  3. Workers’ compensation claims – no limit.
  4. Unearned premium claims – excess over $25 up to $300,000.

Vermont Guaranty Associations belong to and coordinate their activities with other states through national organizations as follows:

The Vermont Guaranty Associations are governed by Plans of Operation that are approved by Vermont’s Department of Banking, Insurance, Securities and Health Care Administration. Copies of the respective documents are at the following links:

Vermont Life and Health Insurance Guaranty Association Plan of Operation

Vermont Property & Casualty Guaranty Association Plan of Operation