Key Takeaways
- CIGA protects California policyholders when P&C insurers become insolvent
- CIGA covers claims up to $500,000 per claim for most covered claims
- Workers' compensation claims are covered without a cap
- CIGA does not cover surplus lines policies or self-insured plans
- Producers cannot advertise or use CIGA coverage as a selling point
Last updated: January 2026
California Insurance Guarantee Association (CIGA)
The California Insurance Guarantee Association (CIGA) protects California residents when P&C insurance companies become insolvent.
Purpose and Function
CIGA:
- 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:
- CDI takes over - Places insurer in liquidation
- CIGA activates - Takes responsibility for covered policies
- Claims processed - CIGA pays covered claims
- Assessments made - Member insurers pay assessments
Coverage Limits
CIGA provides coverage up to specific limits:
Claim Limits
| Coverage Type | Maximum |
|---|---|
| Most Covered Claims | $500,000 per claim |
| Workers' Compensation | No cap |
| Homeowners Claims | $500,000 |
| Auto Claims | $500,000 |
| Commercial Claims | $500,000 |
Aggregate Limits
- $500,000 maximum per claimant
- Workers' comp has no aggregate limit
- $10,000 deductible may apply to some claims
What Is Covered
CIGA covers claims under:
Covered Policies
- Homeowners insurance
- Auto insurance
- Commercial property
- Commercial liability
- Workers' compensation
- Personal liability
What's NOT Covered
| Not Covered | Reason |
|---|---|
| Surplus lines policies | Non-admitted insurers |
| Self-insured plans | Not insurance policies |
| Title insurance | Separate guaranty fund |
| Marine insurance | Separate coverage |
| Amounts above limits | Statutory limit applies |
| Return of unearned premium | Not a claim |
Funding
CIGA is funded by assessments on member insurers:
Assessment Process
- Member insurers pay assessments when needed
- Based on premium volume in California
- May be passed to policyholders via rate increases
- Recouped over time
Assessment Categories
| Category | Purpose |
|---|---|
| Workers' Comp Account | WC claims only |
| Auto Account | Auto claims |
| Other Account | All other claims |
Producer Restrictions
Advertising Prohibition
Producers cannot:
- Use CIGA coverage as a selling point
- Advertise guaranty association protection
- Imply policies are "guaranteed" by CIGA
- Compare CIGA to FDIC or SIPC
- Suggest choosing insurer based on CIGA
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 CIGA coverage as a selling point. This is a frequently tested rule in California.
Claims Process
When an insurer becomes insolvent:
- Notice sent - CIGA notifies policyholders
- Claims submitted - To CIGA directly
- Claims evaluated - Within statutory limits
- Benefits paid - If claim is covered
- Policy may end - Policyholder finds new coverage
Timeframes
- CIGA handles claims during liquidation
- Process can take months to years
- Priority given to workers' comp claims
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Test Your Knowledge
What is the maximum coverage CIGA provides for most P&C claims?
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Test Your Knowledge
Can a California P&C producer use CIGA coverage as a selling point?
A
B
C
D
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