Vermont Property and Casualty Insurance Guaranty Association
What is the Vermont Property and Casualty Insurance Guaranty Association (VTPCIGA)?
VTPCIGA 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 Vermont be a member of VTPCIGA.
A separate guaranty system exists for insurers that write life and health insurance and annuities. VTPCIGA handles only certain property and casualty matters.
What is the role of the VTPCIGA?
VTPCIGA is designed to ease the burden on policyholders of and claimants against an insolvent insurer, by stepping in to assume responsibility for most policy claims following the insolvency. The coverage VTPCIGA 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 VTPCIGA, 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 VTPCIGA get the money to pay the claims?
VTPCIGA is funded by assessments of member insurers following an insolvency.
What kinds of insurance policies are protected by VTPCIGA?
Most property and liability insurance policies written by insurers licensed in the State of Vermont, such as auto, homeowner's and workers' compensation are protected. VTPCIGA does not cover life, title, surety, health, credit, mortgage guaranty, and ocean marine insurance.
Is there a limit to what VTPCIGA will pay?
Generally, yes. Most claims pay up to the policy limits or $500,000, whichever is less. For workers' compensation claims, there is no limit. In addition, all other available insurance must be exhausted before VTPCIGA 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?
In most instances, VTPCIGA will refund the amount of the policyholder's paid but unearned premium if it is in excess of $25.00, up to a maximum of $500,000 per policy.
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 VTPCIGA 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.