Dallas Fort Worth Insurance Lawyer Blog
Let’s say you buy an insurance policy in Dallas or Grand Prairie. You drive over to Fort Worth or Arlington. You actually live in Weatherford or somewhere else in Parker County. Next, you incur a loss that you believe is suppose to be covered under the insurance policy you bought. Okay so far, but you call the insurance company to file a claim and you get told that the company has been having financial problems and is possibly going out of business. What happens now? The result will be the same no mattter where you are in Texas.
Most businesses that need protection because of financial problems they are experiencing file for some form of bankruptcy protection. When an insurance company has severe financial problems they are placed in receivorship.
There are two main classifications for a financially troubled insurance company in Texas. The first is called, “impaired”, meaning that the insurer does not have admitted assets at least equal to all its liabilities together with the minimum surplus required to be maintained under the insurance code. The second is, “insolvency” or “insolvent”, which means an insurer: (A) is unable to pay its obligations when they are due; (B) does not have admitted assets at least equal to all its liabilities; or (C) has total adjusted capital that is less than that required under various chapters of the insurance code.
The current claims and new claims received when a company is having financial problems are handled by a “Special Deputy Receiver”. The failed insurance company transfers all of its outstanding claims to this “receiver”. The receiver mails out information about filing claims, including deadlines.
The receiver has the same investgative and payment guidelines and requirments as the failed insurance company. However, Court-ordered deadlines, company restructuring, or poor company records could delay payments.
The biggest negative is that the payments from the receiver have limits that would not apply if the company were not in receivership. On the other hand, these limits are not going to apply to the majority of claims.
No matter how much you try, it is unlikely that you would understand the claims process when a company goes into receivership. It not that it is that difficult, it is just that it is something different. Only an experienced Insurance Law Attorney is going to be able to help you navigate through the claims process when an insurance company goes into receivership. Without the assistance of an attorney, you are going to feel like you got taken advantage of. Furthermore, this is a time when lots of mistakes will probably be made by the receiver, which entitles you to more compensation as penalties, for the wrongs that are committed.
More information about what happens when your insurance company fails can be found at the Texas Department of Insurance web site.