Texas General Lines — Property and CasualtyTexas Laws and RegulationsMedium
A Texas resident's home is severely damaged by a hurricane, and they discover their homeowner's policy was issued by an unauthorized insurer. The insurer is now insolvent and unable to pay claims. Which of the following entities would likely provide financial assistance for the covered portion of the claim?
- ATexas Property and Casualty Insurance Guaranty Association (TPCIGA)
- BTexas FAIR Plan Association
- CTexas Windstorm Insurance Association (TWIA)
- DTexas Automobile Insurance Plan Association (TAIPA)
Show answer & explanationAnswer & explanation
Correct answer: A. Texas Property and Casualty Insurance Guaranty Association (TPCIGA)
The Texas Property and Casualty Insurance Guaranty Association (TPCIGA) was created to protect policyholders in the event that a member property and casualty insurance company becomes insolvent and cannot meet its obligations.
Why the other options are wrong
- B. The Texas FAIR Plan provides basic property insurance to those who cannot obtain it in the standard market due to reasons other than insolvency.
- C. TWIA provides windstorm and hail insurance for properties along the Texas coast, but it does not cover claims from insolvent unauthorized insurers.
- D. TAIPA provides auto insurance for high-risk drivers who cannot obtain coverage in the voluntary market.
Texas Property and Casualty Insurance Guaranty Association (TPCIGA)
An association that pays covered claims of insolvent member property and casualty insurance companies, protecting policyholders from financial loss when their insurer fails.
- Funded by assessments on member insurers.
- Provides a safety net for policyholders.
- Has limits on the amount it will pay per claim.
Memory trick: Guaranty funds catch when insurers fall.