Key Takeaways
- NCPCIGA protects North Carolina policyholders when P&C insurers become insolvent
- NCPCIGA covers claims up to $300,000 per claimant for most covered claims
- Workers' compensation claims are covered up to statutory limits
- NCPCIGA does not cover surplus lines policies or self-insured plans
- Producers cannot advertise or use NCPCIGA coverage as a selling point
NC Property and Casualty Insurance Guaranty Association (NCPCIGA)
The North Carolina Property and Casualty Insurance Guaranty Association (NCPCIGA) protects North Carolina residents when P&C insurance companies become insolvent.
Purpose and Function
NCPCIGA:
- Protects policyholders of insolvent P&C insurers
- Pays covered claims up to statutory limits
- Funded by assessments on member insurers
- Operates under NC General Statutes
How It Works
When a P&C insurer becomes insolvent:
- NCDOI takes over - Places insurer in receivership/liquidation
- NCPCIGA activates - Takes responsibility for covered claims
- Claims processed - NCPCIGA pays covered claims
- Assessments made - Member insurers pay assessments
Coverage Limits
NCPCIGA provides coverage up to specific limits:
Claim Limits
| Coverage Type | Maximum |
|---|---|
| Most Covered Claims | $300,000 per claimant |
| Workers' Compensation | Statutory limits |
| Homeowners Claims | $300,000 |
| Auto Claims | $300,000 |
| Commercial Claims | $300,000 |
Important Limitations
- $300,000 maximum per claimant (most claims)
- Deductible may apply to certain claims
- Large commercial accounts may have limits
- Net worth deduction for large insureds
Exam Tip: The $300,000 limit per claimant is a key number to remember for NCPCIGA.
What Is Covered
NCPCIGA covers claims under:
Covered Policies
- Homeowners insurance
- Auto insurance
- Commercial property
- Commercial liability
- Workers' compensation
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 |
| Amounts above limits | Statutory limit applies |
| Life & health | Separate guaranty association |
| Fidelity/surety bonds | Generally excluded |
Funding
NCPCIGA is funded by assessments on member insurers:
Assessment Process
- Member insurers pay assessments when needed
- Based on premium volume in North Carolina
- May be recouped through rate increases (with approval)
- Separate accounts by line of insurance
Assessment Accounts
| Account | Purpose |
|---|---|
| Workers' Comp Account | WC claims only |
| Auto Account | Auto claims |
| All Other Account | Property and other claims |
Producer Restrictions
Advertising Prohibition
Producers cannot:
- Use NCPCIGA coverage as a selling point
- Advertise guaranty association protection
- Imply policies are "guaranteed" by NCPCIGA
- Compare NCPCIGA to FDIC insurance
- Suggest choosing insurer based on NCPCIGA protection
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: Producers CANNOT use NCPCIGA coverage as a selling point. This prohibition is frequently tested.
Claims Process
When an insurer becomes insolvent:
- Notice sent - NCPCIGA notifies policyholders
- Claims submitted - To NCPCIGA
- Claims evaluated - Within statutory limits
- Benefits paid - If claim is covered
- Policy may end - Policyholder finds new coverage
Claim Filing
- Submit proof of claim to NCPCIGA
- Include all supporting documentation
- Claims subject to $300,000 limit
- Workers' comp claims at statutory limits
Net Worth Reduction
For insureds with significant net worth:
- Coverage may be reduced
- Encourages large entities to manage own risk
- Does not apply to workers' comp claims
What is the maximum coverage NCPCIGA provides for most P&C claims?
Can a North Carolina P&C producer use NCPCIGA coverage as a selling point?
Which of the following is NOT covered by NCPCIGA?
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