What type of protection does the Texas Insurance Guaranty Association provide?

What type of protection does the Texas Insurance Guaranty Association provide?

• A. Protection against discrimination
• B. Coverage for liabilities incurred
• C. Coverage for policyholders in cases of insurer insolvency
• D. Discounted premiums for low-income families

Answer: (C)

The Texas Insurance Guaranty Association (TIGA) provides essential protection for policyholders when an insurance company becomes insolvent. This means if an insurance company fails to meet its financial obligations and cannot pay claims, TIGA steps in to ensure that policyholders can still receive the benefits they are entitled to under their insurance policies. This safety net is crucial because it helps to maintain the stability of the insurance market and provides peace of mind to policyholders, knowing that they will not lose their coverage or be left with unpaid claims due to their insurer's financial difficulties. By protecting policyholders in the event of insurer insolvency, TIGA plays a vital role in the overall functioning of the insurance system in Texas, fostering public trust in the insurance industry. Other options, such as protection against discrimination, coverage for liabilities, or discounted premiums for low-income families, do not reflect the specific purpose and functions of TIGA. The association’s focus is strictly on protecting policyholders from the repercussions associated with their insurer's failure, making it a key feature of the state's regulatory and safety structure for insurance.

The Texas Insurance Guaranty Association (TIGA) provides essential protection for policyholders when an insurance company becomes insolvent. This means if an insurance company fails to meet its financial obligations and cannot pay claims, TIGA steps in to ensure that policyholders can still receive the benefits they are entitled to under their insurance policies.

This safety net is crucial because it helps to maintain the stability of the insurance market and provides peace of mind to policyholders, knowing that they will not lose their coverage or be left with unpaid claims due to their insurer's financial difficulties. By protecting policyholders in the event of insurer insolvency, TIGA plays a vital role in the overall functioning of the insurance system in Texas, fostering public trust in the insurance industry.

Other options, such as protection against discrimination, coverage for liabilities, or discounted premiums for low-income families, do not reflect the specific purpose and functions of TIGA. The association’s focus is strictly on protecting policyholders from the repercussions associated with their insurer's failure, making it a key feature of the state's regulatory and safety structure for insurance.