What To do If Your Car Insurance Firm Goes Bankrupt?
Even though it is not a regular occurrence there is a chance that your car insurance company may go insolvent. Anybody may express that you can check the financial health of a company before you take a policy. But it is fairly difficult for average drivers to foresee a bankruptcy. Luckily there are safety nets to protect insureds in those cases.
Every state has a safety net in place called guaranty funds or associations to cover the claims made by the customers of bankrupt insurance company. Your state guaranty fund would pay the current claims up to a level set by every state and hand back part of not used up premiums. Admittingly it might be different in each state and it can change, maximum claim limits are around $300,000. This level is considered to be enough to protect most claims.
Commonly people do not have to claim their rights since they are already covered by these blanket funds. Every licensed insurance firm has to join state safety net to conduct business in that state. Consumers could check if a firm is licensed to sell vehicle insurance in their state in number of ways including checking the licence number.
If you have put in a claim already it would be paid by the state safety funds but it may be slower than typical handling time. State insurance regulator would assist customers move their insurance to a different carrier and answer customer enquiries. It would be advisable to find out what to do quickly and obtain a new cover to avoid any further complications.
If you like to reduce the chance of becoming a victim of a bankrupt provider you might learn the rating of the provider before acquiring coverage. Rating is the evidence of financial stability of a company and number of companies supply it.
Usually if you obtain similar quotes from competing companies you may like to choose the safer one with a credibility to pay claims quickly. For that reason you need several quotes to see where companies stand in comparison with each other. If one insurer comes up with noticeably lower quote than all the rest, you might like to think again.
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