Connecticut Insurance Guaranty Association
What is the Connecticut Insurance Guaranty Association (CIGA)?
CIGA is part of a non-profit, unincorporated, state-based statutorily created system that pays certain covered claims of insolvent insurance companies' policyholders and claimants. Guaranty associations exist in every state. The state law requires that all licensed property and casualty insurance companies that write covered lines of insurance in the State of Connecticut be a member of CIGA.
A separate guaranty system exists for insurers that write life and health insurance and annuities. CIGA handles only certain property and casualty matters.
What is the role of CIGA?
CIGA is designed to ease the burden on policyholders of and claimants against an insolvent insurer, by stepping in to assume responsibility for covered policy claims following the insolvency. The coverage CIGA provides is fixed by policy language and state law; guaranty associations do not issue insurance policies. If your company is declared insolvent, it is incumbent on you to secure a replacement policy.
By virtue of the authority given to CIGA, it is able to provide payment of covered claims up to the limits set by the policy or by statute, whichever is less.
Where does CIGA get the money to pay the claims?
CIGA is funded by assessments of member insurers following an insolvency
What kinds of insurance policies are protected by CIGA?
Most property and liability insurance policies written by insurers licensed in the State of Connecticut, such as auto, homeowner's, and workers' compensation are protected. CIGA does not cover life, annuity, health or disability insurance, mortgage guaranty, financial guaranty or other forms of insurance offering protection against investment risks, fidelity or surety or any bonding obligations, credit insurance or any similar insurance protecting the interests of a creditor arising out of a creditor-debtor transaction, insurance of warranties or service contracts, title insurance, ocean marine insurance, any transaction involving the transfer of investment or credit risk unaccompanied by transfer of insurance risk, and any insurance provided or guaranteed by government, including federal Flood Disaster Protection.
Is there a limit to what CIGA will pay?
Generally, yes. Most claims pay in excess of $100 up to the policy limits or $300,000, whichever is less, for claims arising under policies of insurers determined to be insolvent prior to October 1, 2007, and in excess of $100 up to the policy limits or $400,000, whichever is less, for claims arising under policies of insurers determined to be insolvent on or after October 1, 2007. For workers' compensation claims, there is no limit. In addition, all other available insurance must be exhausted before CIGA will become obligated on any covered claim.
What about any premium I've already paid for the policy that is now cancelled before its original expiration period?
CIGA will refund 50% of the unearned premium paid on a covered policy, up to a maximum of $2,000.
Before my company was declared insolvent, it was defending me in a lawsuit brought under my policy. What happens now?
If the company is already defending the case, in most insolvencies CIGA will take control of the case and will continue to defend the suit or negotiate a settlement on your behalf, subject to the limitations in the insolvency statute about coverage.
IF THERE IS ANY INCONSISTENCY BETWEEN INFORMATION PROVIDED HEREIN AND ANY LAW OR REGULATION, THEN SUCH LAW OR REGULATION, OR ANY INTERPRETATION OF THE LAW OR REGULATION BY THE COURTS, WILL CONTROL.