What is the Definition of Guaranty Fund?
The mechanism by which solvent insurers ensure that some of the policyholder and third-party claims against insurance companies that fail are paid. Such funds are required in all 50 states, the District of Columbia and Puerto Rico, but the type and amount of claim covered by the fund varies from state to state. Some states pay policyholders’ unearned premiums—the portion of the premium for which no coverage was provided because the company was insolvent. Some have deductibles. Most states have no limits on workers compensation payments. Guaranty funds are supported by assessments on insurers doing business in the state.
Source: Insurance Handbook A guide to insurance: what it does and how it works | https://www.iii.org/
Label: Insurance
Theme: Dictionary of Insurance Terms
Other Questions: What is the definition of Annuity?
What is the Definition of Guaranty Fund?
You can find random definition and meaning of insurance terms below:
Meaning of Loss Of Use in Insurance Terms
A provision in homeowners and renters insurance policies that reimburses policyholders for any extra living expenses due to having to live elsewhere while their home is being restored following a disaster.
Meaning of Loss Ratio in Insurance Terms
Percentage of each premium dollar an insurer spends on claims.
Meaning of Loss Reserves in Insurance Terms
The company’s best estimate of what it will pay for claims, which is periodically readjusted. They represent a liability on the insurer’s balance sheet.
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