What Happens When Insurance Carrier for Other Driver is Bankrupt?
Transcript: Hi, I’m Indiana personal injury attorney David Holub.
In this video, we discuss what happens if an insurance carrier that insures the other driver in an injury case becomes insolvent or files bankruptcy.
In such a situation, there is by statute something called an insurance guaranty fund.
This guaranty fund is made up of money that comes from the premiums of every insurance carrier in the state and it’s pooled together in this fund so that if any one particular insurance company becomes insolvent, that this guaranty fund administered by the state can step in and pay claims. The problem is they don’t pay a full 100% of a claim.
They usually pay a pro rata share or a small share based upon all the different claims that are against the company.
You have to realize that when a company becomes insolvent, it’s because they’ve had poor financial management and there is usually a limited amount of funds to go around. And the guaranty fund is very limited in what it can do and what claims can be accepted for payment. The process of presenting a claim to the Indiana insurance guaranty fund is complex and it’s time consuming. These cases move at a very slow pace.
Consequently, you would have to be patient if this kind of a situation occurs during the handling of your claim.
We hope this information has been helpful and we have a number of other videos on our website that we invite you to go to, as well as other written information. Please feel free to call us if you have a question about a personal injury claim.