Key Takeaways
- PPCIGA protects Pennsylvania policyholders when P&C insurers become insolvent
- PPCIGA covers claims up to $300,000 per claim for most covered claims
- Workers' compensation claims are covered with specific limits
- PPCIGA does not cover surplus lines policies or self-insured plans
- Producers cannot advertise or use PPCIGA coverage as a selling point
Pennsylvania Property and Casualty Insurance Guaranty Association (PPCIGA)
The Pennsylvania Property and Casualty Insurance Guaranty Association (PPCIGA) protects Pennsylvania residents when P&C insurance companies become insolvent.
Purpose and Function
PPCIGA:
- Protects policyholders of insolvent P&C insurers
- Pays covered claims up to statutory limits
- Funded by assessments on member insurers
- Operates under state law supervision
How It Works
When a P&C insurer becomes insolvent:
- Department takes over - Places insurer in liquidation
- PPCIGA activates - Takes responsibility for covered policies
- Claims processed - PPCIGA pays covered claims up to limits
- Assessments made - Member insurers pay assessments
Coverage Limits
PPCIGA provides coverage up to specific limits:
Claim Limits
| Coverage Type | Maximum |
|---|---|
| Most Covered Claims | $300,000 per claim |
| Workers' Compensation | Statutory limits |
| Homeowners Claims | $300,000 |
| Auto Claims | $300,000 |
| Commercial Claims | $300,000 |
Important: Pennsylvania's PPCIGA limit is $300,000 per claim—lower than some other states. Know this limit for the exam.
Aggregate Limits
- $300,000 maximum per claimant for most claims
- Separate accounts for different lines
- Deductibles may apply in some cases
What Is Covered
PPCIGA covers claims under:
Covered Policies
- Homeowners insurance
- Auto insurance
- Commercial property
- Commercial liability
- Workers' compensation
- Personal liability
- Inland marine
What's NOT Covered
| Not Covered | Reason |
|---|---|
| Surplus lines policies | Non-admitted insurers |
| Self-insured plans | Not insurance policies |
| Title insurance | Separate guaranty fund |
| Ocean marine | Separate coverage |
| Amounts above limits | Statutory limit applies |
| Return of unearned premium | Limited coverage |
Funding
PPCIGA is funded by assessments on member insurers:
Assessment Process
- Member insurers pay assessments when needed
- Based on premium volume in Pennsylvania
- May be passed to policyholders via rate increases
- Recouped over time
Assessment Accounts
| Account | Purpose |
|---|---|
| Workers' Comp Account | WC claims only |
| Auto Account | Auto claims |
| Other Account | All other claims |
Producer Restrictions
Advertising Prohibition
Producers cannot:
- Use PPCIGA coverage as a selling point
- Advertise guaranty association protection
- Imply policies are "guaranteed" by PPCIGA
- Compare PPCIGA to FDIC or SIPC
- Suggest choosing insurer based on PPCIGA
Required Conduct
| Requirement | Details |
|---|---|
| If asked | Provide accurate information |
| Limits | Cannot misrepresent coverage limits |
| Not a selling point | Cannot use to induce sales |
| Disclosure | Must be truthful if questioned |
Exam Tip: Remember that producers CANNOT use PPCIGA coverage as a selling point. This is a frequently tested rule in Pennsylvania.
Claims Process
When an insurer becomes insolvent:
Timeline
- Notice sent - PPCIGA notifies policyholders
- Claims submitted - To PPCIGA directly
- Claims evaluated - Within statutory limits
- Benefits paid - If claim is covered
- Policy may end - Policyholder finds new coverage
Policyholder Responsibilities
- Report claims promptly
- Cooperate with investigation
- Provide documentation
- Seek replacement coverage
- Understand coverage limits
PPCIGA vs. Other State Guaranty Associations
Pennsylvania's PPCIGA differs from some other states:
| Feature | Pennsylvania |
|---|---|
| Per-claim limit | $300,000 |
| WC coverage | Statutory limits |
| Surplus lines | Not covered |
| Self-insurance | Not covered |
What is the maximum coverage PPCIGA provides for most P&C claims?
Can a Pennsylvania P&C producer use PPCIGA coverage as a selling point?
Which type of policy is NOT covered by PPCIGA?
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