Key Takeaways
- The Property/Casualty Insurance Security Fund protects New York policyholders when P&C insurers become insolvent
- The Security Fund covers claims up to $1,000,000 for most covered claims
- Workers' compensation claims are covered without a cap through a separate account
- The Security Fund does not cover excess lines policies or self-insured plans
- Producers cannot advertise or use Security Fund coverage as a selling point
Last updated: January 2026
New York Property/Casualty Insurance Security Fund
The New York Property/Casualty Insurance Security Fund protects New York residents when P&C insurance companies become insolvent.
Purpose and Function
The Security Fund:
- Protects policyholders of insolvent P&C insurers
- Pays covered claims up to statutory limits
- Funded by assessments on member insurers
- Operates under DFS supervision
How It Works
When a P&C insurer becomes insolvent:
- DFS takes over - Places insurer in liquidation
- Security Fund activates - Takes responsibility for covered policies
- Claims processed - Fund pays covered claims
- Assessments made - Member insurers pay assessments
Coverage Limits
The Security Fund provides coverage up to specific limits:
Claim Limits
| Coverage Type | Maximum |
|---|---|
| Most Covered Claims | $1,000,000 per claim |
| Workers' Compensation | No cap |
| Auto Claims | $1,000,000 |
| Homeowners Claims | $1,000,000 |
| Commercial Claims | $1,000,000 |
Special Provisions
- Workers' comp covered through separate account
- Commercial claims may have different provisions
- $1 million is higher than many other states
What Is Covered
The Security Fund covers claims under:
Covered Policies
- Homeowners insurance
- Auto insurance
- Commercial property
- Commercial liability
- Workers' compensation
- Personal liability
What's NOT Covered
| Not Covered | Reason |
|---|---|
| Excess lines policies | Non-admitted insurers |
| Self-insured plans | Not insurance policies |
| Title insurance | Separate fund |
| Financial guaranty | Excluded |
| Amounts above limits | Statutory limit applies |
| Return of unearned premium | Not a claim |
Funding
The Security Fund is funded by assessments on member insurers:
Assessment Process
- Member insurers pay assessments when needed
- Based on premium volume in New York
- May be passed to policyholders via rate increases
- Recouped over time through rates
Separate Accounts
| Account | Purpose |
|---|---|
| Workers' Comp Account | WC claims only |
| Auto Account | Auto claims |
| Other Account | All other P&C claims |
Producer Restrictions
Advertising Prohibition
Producers cannot:
- Use Security Fund coverage as a selling point
- Advertise guaranty fund protection
- Imply policies are "guaranteed" by the fund
- Compare to FDIC or SIPC
- Suggest choosing insurer based on fund coverage
Required Conduct
- Provide accurate information if asked directly
- Cannot misrepresent coverage limits
- Cannot suggest coverage exceeds actual limits
- Must not use to induce sales
Exam Tip: Remember that producers CANNOT use Security Fund coverage as a selling point. This is frequently tested in New York.
Claims Process
When an insurer becomes insolvent:
- Notice sent - Security Fund notifies policyholders
- Claims submitted - To Security Fund
- Claims evaluated - Within statutory limits
- Benefits paid - If claim is covered
- Policy may end - Policyholder finds new coverage
Priority of Claims
- Workers' compensation claims priority
- Individual claims processed in order
- Large commercial claims may take longer
- Policyholders should seek new coverage promptly
Comparison to Other States
| Feature | New York | Many Other States |
|---|---|---|
| Maximum Limit | $1,000,000 | $300,000-$500,000 |
| WC Coverage | No cap | Varies |
| Excess Lines | Not covered | Not covered |
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Test Your Knowledge
What is the maximum coverage the NY Property/Casualty Insurance Security Fund provides for most P&C claims?
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D
Test Your Knowledge
Can a New York P&C producer use Security Fund coverage as a selling point?
A
B
C
D
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