Key Takeaways
- The Illinois Insurance Guaranty Fund (ILPLIGA) protects Illinois policyholders when P&C insurers become insolvent
- ILPLIGA covers claims up to $300,000 per claimant for most covered claims
- Workers' compensation claims are covered up to statutory limits
- ILPLIGA does not cover surplus lines policies or self-insured plans
- Producers cannot advertise or use ILPLIGA coverage as a selling point
Last updated: January 2026
Illinois Insurance Guaranty Fund (ILPLIGA)
The Illinois Insurance Guaranty Fund (commonly called ILPLIGA for Property/Liability) protects Illinois residents when P&C insurance companies become insolvent.
Purpose and Function
ILPLIGA:
- 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 (215 ILCS 5/Art. XXXV)
How It Works
When a P&C insurer becomes insolvent:
- DOI takes over - Places insurer in liquidation
- ILPLIGA activates - Takes responsibility for covered claims
- Claims processed - ILPLIGA pays covered claims
- Assessments made - Member insurers pay assessments
Coverage Limits
ILPLIGA provides coverage up to specific limits:
Claim Limits
| Coverage Type | Maximum |
|---|---|
| Most Covered Claims | $300,000 per claimant |
| Workers' Compensation | Statutory limits |
| Return of Unearned Premium | Limited |
| Homeowners Claims | $300,000 |
| Auto Claims | $300,000 |
Important Limitations
- $300,000 maximum per claimant for most claims
- $100 deductible may apply
- Net worth test may reduce coverage for large entities
- Claims must arise from Illinois policies
What Is Covered
ILPLIGA covers claims under:
Covered Policies
- Homeowners insurance
- Auto insurance
- Commercial property
- Commercial liability
- Workers' compensation
- Professional 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 |
| Ocean marine insurance | Excluded by law |
| Amounts above limits | Statutory limit applies |
| Life & health | Separate guaranty association |
| Large net worth entities | May have reduced coverage |
Funding
ILPLIGA is funded by assessments on member insurers:
Assessment Process
- Member insurers pay assessments when needed
- Based on premium volume in Illinois
- May be recouped through rate increases
- Separate accounts by line of insurance
Assessment 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 ILPLIGA coverage as a selling point
- Advertise guaranty fund protection
- Imply policies are "guaranteed" by ILPLIGA
- Compare ILPLIGA to FDIC
- Suggest choosing insurer based on ILPLIGA
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 ILPLIGA coverage as a selling point. This is a frequently tested rule.
Claims Process
When an insurer becomes insolvent:
- Notice sent - ILPLIGA notifies policyholders
- Claims submitted - Directly to ILPLIGA
- Claims evaluated - Within statutory limits
- Benefits paid - If claim is covered
- Find new coverage - Policyholder obtains replacement coverage
Triggering Event
- Insurer must be:
- Licensed in Illinois
- Member of ILPLIGA
- Placed in liquidation by court order
- Claims must arise from Illinois policies
Net Worth Test
For certain claimants:
- Entities with net worth over $25-50 million
- Coverage may be reduced or eliminated
- Encourages large companies to manage risk differently
- Does not apply to workers' compensation
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Test Your Knowledge
What is the maximum coverage ILPLIGA provides for most P&C claims?
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Test Your Knowledge
Can an Illinois P&C producer use ILPLIGA coverage as a selling point?
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B
C
D
Test Your Knowledge
Which type of insurance is NOT covered by ILPLIGA?
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D
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