In Nevada, there is understandable concern about all aspects of insurance. A policy is designed to serve as a safety net to cover people for unexpected loss. Still, many worry about rising rates and increasing difficulty in finding policies that suit the individual’s needs whether it is personal or business-related.
A growing challenge is the insurance companies themselves and fear that they could go out of business if a major catastrophe happens and they are suddenly inundated with claims they are unable to cover financially.
This might sound farfetched, but for some companies, it only takes one disaster to place their entire business model in jeopardy. People who have an insurer that is either teetering on insolvency or is already insolvent must understand their options to protect their interests, recover for what was lost and was supposed to be covered by their policy.
Understand state law about insolvent insurers
State law addresses insolvent insurers. For insurers that are unable to pay their debts, the Nevada Insurance Guaranty Association – shortened to NVIGA – will protect people and entities that have coverage from companies that will not pay out on claims. NVIGA pays based on the policy limits so the policyholder will be repaid for replacement or repairs.
Covered claims is a key part of this. Since insurers are contractually obligated to pay based on the policy, NVIGA’s function is to ensure that the policyholder is not left without alternatives to pay for what was lost and would have been paid for if the company was solvent.
NVIGA will take over the claim, doing what the insurance company and its adjusters would have done if they were able to. It shields the policyholder financially and can also defend the policyholder if they are subjected to a lawsuit and the company was contractually expected to provide a defense.
Policyholders should have the proper information about insolvent insurers
Insurance companies across the nation have run into problems paying the litany of claims they are being asked to pay. Often, this is related to a natural disaster like a hurricane or a tragic event like a wildfire.
Nevada residents must be prepared and understand their legal rights if they are confronted with an insolvent insurer. Since insurance law can be complicated, they must be protected and have advice from professionals who know what steps to take to make sure their policy is paid.
