guaranty fund limitations

jasonchwjasonchw
in Porter.12-Insolvency

Deductibles are mentioned as 1 of the limitations. Is the deductibles referring to the deductible of the policies of the solvent insurer or a deductible under guaranty funds?

Comments

  • grahamgraham

    It isn't too clear from the source text but the way I read it is that there are 2 deductibles:

    • The first deductible is the "normal" policyholder deductible which is not covered. The policyholder always has to pay this deductible.
    • The second deductible is part of the Model Act (I'm assuming) so in cases of insolvency and reimbursement by the guaranty fund, there would be a second "deductible" for which the policyholder would not be reimbursed.

    Again, that section of the text isn't too clear. If you get this question on your exam, I would stick to the other more straightforward limitations like:

    • applies to specific lines only
    • unearned premium recovery is capped
    • outstanding claim recovery is capped
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