What is the Alabama Insurance Guaranty Association?
Quick answer:
The Alabama Insurance Guaranty Association pays covered claims when an admitted Alabama insurer becomes insolvent: workers' comp in full with no cap, unearned premium up to $10,000, most other claims up to $300,000 or the policy limit (Code of Alabama Sec. 27-42-8). It does not cover surplus-lines (non-admitted) policies.
What is the Alabama Insurance Guaranty Association?
The Alabama Insurance Guaranty Association pays covered claims when an admitted Alabama insurer becomes insolvent.
What are the actual payout limits?
Workers' compensation claims are paid in full with no cap, unearned premium is covered up to $10,000 per policy, and most other covered claims are paid up to $300,000 per claim or the policy limit, whichever is less, under Code of Alabama Section 27-42-8.
What is NOT covered?
It does not cover surplus-lines (non-admitted) policies. A policyholder whose coverage sits with a non-admitted carrier has no guaranty-fund backstop if that carrier fails.
Why does this matter when choosing a carrier?
Confirming a carrier is admitted in Alabama, not just licensed to sell surplus lines, is what gives a policyholder access to this safety net. See how to verify a carrier is licensed for how to check.