What happens when an insurance company becomes insolvent?
When the Department of Insurance determines an insurance company can no longer meet its contractual obligations, the Director will petition the court for an order to liquidate the company.
Liquidation is like bankruptcy. When the order is issued by the court, the Department will distribute the company’s assets according to established law.
If the company is placed into liquidation, will my claim be paid?
If an insurance company is licensed to conduct business in Nebraska and is placed into liquidation, claim payments are generally provided by the guaranty funds. These funds are a safety net for consumers insured by insurance companies licensed in Nebraska.
The funds needed to pay these claims are raised by making assessments against other Nebraska licensed insurance companies. The guaranty fund also becomes a creditor of the liquidated estate of the company. Certain types of policy contracts may not be covered.
Who will administer my claim?
The Nebraska Life and Health Insurance Guaranty Association (NLHIGA) administers life, annuity, accident, and health insurance claims. Examples of insurance that fall under the guaranty fund are life, accident, disability, long-term care, and medical insurance.
The Nebraska Property and Liability Guaranty Association (NPLIGA) administers property and liability insurance claims, Examples of insurance that fall under the guaranty fund are auto, homeowners, liability, and workers’ compensation insurance.
Note: The NLHIGA and NPLIGA are not agencies of or backed by the State of Nebraska.
Will my claim be paid in full?
For Nebraska residents, NLHIGA will pay according to the provisions of you policy but will not exceed:
• $300,000 in life insurance death benefits
• $250,000 in present value of annuity benefits
• $500,000 in health insurance benefits
• $300,000 in disability or long-term care insurance
• $300,000 aggregate for life and annuity benefits
• $500,000 aggregate for life, annuity, and health benefits.
Exceptions or limitations may apply.
For Nebraska residents at time of loss or for property permanently located in Nebraska, policy provisions describe covered claims. NPLIGA pays more than $100 and up to $300,000 or the policy limit, whichever is less. On any covered claim out of a workers’ compensation policy, the fund will pay the amount required by law. Payments will also be made on covered claims for unearned premiums more than $100 and less than $10,000 per policy. Exceptions and limitations may apply.
How do I contact the guaranty associations?
Nebraska Life and Health Insurance Guaranty Association
416 Valley View Drive, Suite 304
Scottsbluff, NE 69361
402-479-7200
www.nelifega.org
Nebraska Property and Liability Insurance Guaranty Association
1873 South Bellaire Street, Suite 920
Denver, CO 80222
303-759-5066
www.npliga.org
Do I have guaranty fund protection if I bought insurance from an unlicensed insurance company?
No. If an insurance company is not licensed, policyholder claims are NOT covered by guaranty funds. This means claims must be paid from the estate of the liquidated unlicensed entity. As a result, policyholders may not receive any payment or may only receive partial payment for their claims. Visit the Company and Producer search page to find if your company is licensed in Nebraska.
Where can I obtain information about the financial status of my insurance company?
You can use several resources to review financial information including:
• Call the Department of Insurance at 402-471-2201 or on its toll-free hotline at 1-877-564-7323
• Visit the National Association of Insurance Commissioners’ Consumer Insurance Search webpage
