Finding out that your insurance provider is going out of business can be stressful. However, there are steps you can take to protect yourself and ensure continuous coverage. In this guide, we will walk you through what to do if your insurance company shuts down.
1. Don’t Panic – Your Policy May Still Be Protected
Most insurance providers are backed by state guaranty associations, which help policyholders if a company fails. This means you may still have coverage for a certain period while you transition to a new provider.
2. Verify the Situation
Check official announcements from your insurer.
Look for information from state insurance regulators.
Contact your insurance agent for details.
3. Check Your State’s Guaranty Association
Each state has a guaranty association that protects policyholders. They may cover your claims up to a certain limit. Visit the website of your state’s insurance guaranty association to understand your rights.
4. Continue Paying Your Premiums (If Required)
In some cases, the state guaranty association may require policyholders to continue making payments to keep coverage active temporarily. Verify whether you need to continue payments or switch providers immediately.
5. Start Shopping for a New Policy
It’s important to find a new insurance provider as soon as possible to avoid gaps in coverage. Here’s how:
Compare quotes from multiple insurance companies.
Check customer reviews and ratings.
Consult with an insurance agent for guidance.
6. Transfer Your Policy to a New Provider
Once you choose a new insurer:
Apply for a policy before your current one expires.
Make sure you understand the terms and coverage details.
Cancel your old policy only after your new coverage begins.
7. Monitor Your Claims
If you have an active claim with the failed insurer, check with your state guaranty association about how it will be processed. Some claims may still be paid, but there could be delays.
8. Stay Informed
Keep an eye on financial health ratings of insurance companies before purchasing policies. Organizations like A.M. Best, Moody’s, and Standard & Poor’s provide financial stability ratings that can help you choose a reliable insurer.
