Guaranty Fund
Plain English Definition: A state-run fund protecting policyholders if an insurance company fails.
What Guaranty Fund really means for someone with an insurance policy
If an insurance company becomes insolvent, the guaranty fund steps in to pay outstanding claims up to certain limits.
Guaranty Fund Real World Examples
- A life insurance policyholder receives compensation even after their insurer goes bankrupt.
- Health insurance claims are paid despite the insurance company shutting down.
- Homeowners insurance coverage continues after the insurer is declared insolvent.