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.
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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 http://www.vtlifega.org/ or contact Bill Callnan, Fund Administrator, at 802-244-8540
In general life, annuity and health guaranty association provides the following coverage:
Property and Casualty Contract Coverage:
For general information:
Go to http://www.gfms.org/memberstates.asp?stid=8 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:
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: