California Insurance Guarantee Association: What You Need to Know

California Insurance Guarantee Association (CIGA) is a non-profit, state-mandated organization that helps protect policyholders in the state of California when their insurance company becomes insolvent or fails to pay claims. In this article, we’ll explore the details of CIGA, how it works, and what it covers.

What is CIGA?

CIGA was established in 1969 as a result of the McCarran-Ferguson Act, which allowed states to regulate the insurance industry within their borders. Its primary mission is to provide a safety net for policyholders in California when their insurance company becomes insolvent.

CIGA is not an insurance company, and it does not issue policies or collect premiums. Instead, it acts as a backstop for policyholders by paying claims when an insurance company fails to do so. It is funded through assessments on insurance companies operating in California.

How does CIGA work?

When an insurance company becomes insolvent, CIGA takes over the management of the claims process. Policyholders are typically notified of the situation by the insurance commissioner of California or another regulatory agency.

If you have a claim with an insolvent insurance company, you should file it with CIGA as soon as possible. The claims process can take longer than usual due to the additional steps involved, but CIGA will ultimately process your claim and pay you according to the terms of your policy.

CIGA is not a guarantee that you will receive 100% of the amount due under your policy, but it does provide significant protections for policyholders.

What does CIGA cover?

CIGA covers most types of insurance policies issued in California, including:

Type of Insurance
Maximum Coverage
Auto
$350,000 per policy
Homeowners
$500,000 per policy
Liability
$500,000 per claim
Life and Health
$300,000 per policy

Coverage limits are subject to change based on the availability of funds and other factors.

What is not covered by CIGA?

CIGA does not cover all types of insurance policies. Some policies that are not covered include:

  • Workers’ compensation
  • Employers’ liability
  • Professional liability (such as medical malpractice)
  • Certain types of bonds

If you have a policy that is not covered by CIGA, you should contact your insurance agent or broker for guidance.

FAQs

What is the difference between CIGA and my insurance company?

CIGA is not an insurance company. It is a safety net for policyholders in California when their insurance company becomes insolvent. CIGA does not issue policies or collect premiums.

Do I have to pay anything for CIGA protection?

No, you do not have to pay anything extra for CIGA protection. CIGA is funded through assessments on insurance companies operating in California.

Will CIGA pay 100% of my claim?

CIGA is not a guarantee that you will receive 100% of the amount due under your policy. However, it does provide significant protections for policyholders and will pay claims according to the terms of your policy.

How long does it take to process a claim with CIGA?

The claims process can take longer than usual due to the additional steps involved, but CIGA will ultimately process your claim and pay you according to the terms of your policy.

Can I file a claim with CIGA if my insurance company is not insolvent?

No, you cannot file a claim with CIGA if your insurance company is still solvent. You should file a claim directly with your insurance company in that case.

What should I do if I have a claim with an insolvent insurance company?

If you have a claim with an insolvent insurance company, you should file it with CIGA as soon as possible. The claims process can take longer than usual due to the additional steps involved, but CIGA will ultimately process your claim and pay you according to the terms of your policy.

Conclusion

CIGA provides an important safety net for policyholders in California when their insurance company becomes insolvent. While it may not cover 100% of your claim, it does provide significant protections and should be used if you find yourself in this situation.