Insurance provides a safety net for the unexpected. When something goes wrong, we turn to insurance to help us get back on our feet. But what happens if your insurance company goes out of business? This is where the Louisiana Insurance Guaranty Association comes in.
What is the Louisiana Insurance Guaranty Association?
The Louisiana Insurance Guaranty Association (LIGA) is a non-profit organization created by the Louisiana legislature in 1988. Its purpose is to provide protection to policyholders in the event their insurance company becomes insolvent and cannot fulfill its obligations.
LIGA is funded by the insurance companies it covers. These companies pay an annual assessment fee to LIGA based on their premiums written in Louisiana. LIGA does not receive any taxpayer funds.
What does LIGA cover?
LIGA covers various lines of insurance, including:
Line of Insurance |
Maximum Coverage |
Auto |
$25,000 per person, $50,000 per accident |
Homeowners |
$250,000 per claim |
Life |
$300,000 per policy |
Commercial |
$500,000 per claim |
It is important to note that LIGA does not provide coverage for health insurance or workers’ compensation.
What happens when an insurance company becomes insolvent?
If an insurance company becomes insolvent, it is typically liquidated. The policyholders’ claims are then paid from the company’s assets, which are distributed among the policyholders and other creditors. However, if the company’s assets are insufficient to pay all of the claims, LIGA steps in to cover the remaining amount, up to its maximum coverage limits.
How do I know if my policy is covered by LIGA?
If you have a policy with an insurance company licensed to do business in Louisiana, there is a good chance it is covered by LIGA. However, there are some types of insurance that LIGA does not cover, such as health insurance and workers’ compensation.
If your insurance company becomes insolvent, LIGA will notify you of its involvement in the claims process. You can also contact LIGA directly to inquire about your coverage.
How can I file a claim with LIGA?
If your insurance company becomes insolvent, you should contact LIGA as soon as possible to file a claim. You can do this by visiting LIGA’s website or contacting them by phone or email.
When filing a claim, you will need to provide information about your policy and the claim you are making. LIGA will then review your claim and determine if it is eligible for coverage.
In conclusion
The Louisiana Insurance Guaranty Association provides important protection for policyholders in the event their insurance company becomes insolvent. By knowing what LIGA covers and how to file a claim, you can have peace of mind knowing that you are protected in the event of an unexpected financial loss.
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