What Is the Louisiana Insurance Guaranty Association?

Posted on November 9, 2023


Frances Badayos | author

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ICHQ | Site Author

The Louisiana Insurance Guaranty Association is a statutory entity established by the Louisiana legislature to protect policyholders and claimants. If you have questions about the protections offered under LIGA or need help making a claim, the home insurance claim lawyers at Insurance Claim HQ can help. We serve New Orleans and all surrounding areas, assisting people in navigating the nuances of insurance policies.

When Was the Louisiana Insurance Guaranty Association Established?

The LIGA began in 1970 to provide protection if an insurance company becomes insolvent or cannot meet its financial obligations. The primary objective was to establish a safeguard mechanism, ensuring insurers do not leave policyholders and claimants in the lurch due to the company’s financial incapacity. The move to create LIGA aligned with similar initiatives in other states, aiming to bolster confidence in the insurance sector.

What Does LIGA Do?

When an insurance company licensed in Louisiana fails to honor its commitments, LIGA steps in, providing coverage. Central to LIGA’s operations is its responsibility to manage and settle LIGA claims. These claims arise when the insurance company cannot produce the required compensation for a claim. LIGA provides an extensive range of coverage, spanning from homeowners and auto insurance to workers’ compensation. However, there are set coverage limits to ensure the association’s sustainability.

LIGA operates on funds sourced through assessments of insurance companies conducting business in Louisiana. These mandatory contributions ensure that LIGA has the requisite financial muscle to handle claims stemming from insurer insolvencies. Ultimately, the purpose of the Louisiana Insurance Guaranty Association is to fulfill the state’s commitment to seamless claims management and to foster trust in the state’s insurance landscape.

Benefits of LIGA

LIGA offers many benefits to individual policyholders and society as a whole:

  • Consumer protection: LIGA acts as a safety net for policyholders needing compensation when a company cannot provide it.
  • Financial stability: By providing a backup for insolvent insurers, LIGA contributes to the overall stability of the insurance industry. It helps prevent a cascade of financial losses that could ripple across the sector.
  • Coverage continuity: In the event of the insurance company’s insolvency, LIGA ensures that there is no disruption in policy coverage.
  • Economic impact: LIGA’s role in stabilizing the insurance market indirectly supports Louisiana’s economy. Ensuring the settlement of claims prevents potential financial drains on families and businesses.
  • Industry confidence: The existence of LIGA boosts the reputation of Louisiana’s insurance industry. Knowing there’s a system in place to handle insolvencies can attract more insurers to operate in the state, leading to increased competition and better offerings for consumers.

The Louisiana Insurance Guaranty Association is more than a backup plan for insurance claims.

It is a linchpin for the resilience of the entire insurance ecosystem in Louisiana. Its benefits extend beyond individual policyholders, reinforcing the integrity and reliability of the industry.

What Types of Property Damage Does LIGA Help With?

LIGA and the Louisiana Life and Health Insurance Guaranty Association assist with property damage claims arising from various insurance policies:

  • Homeowners insurance damage claims: LIGA covers damages to a home or residential property caused by fires, hurricanes, tornadoes, theft, and more. This includes structural damage to the home itself and loss or damage to personal belongings.
  • Auto insurance damage claims: LIGA will cover vehicle damage resulting from collisions, vandalism, or other covered hazards. This can range from minor dents and scratches to significant damages or total loss.
  • Commercial property damage claims: For businesses with property insurance facing a situation where their insurer is insolvent, LIGA provides coverage for damages to commercial buildings, machinery, inventory, and other business assets resulting from insured events.
  • Renter’s insurance damage claims: Renters can carry insurance to cover their personal belongings. The Louisiana Insurance Guaranty Association can assist with claims related to damage or loss of items from fire or theft.

In specific scenarios, property damage from specialized insurance policies, like landlord insurance or vacant property insurance, may also fall under an association’s purview. Note that LIGA’s assistance has conditions with state-mandated statutory limits. It only handles casualty and property claims. However, the purpose of the Louisiana Life and Health Insurance Guaranty Association is to expand coverage to other types of claims.

Policyholders should always review their individual policies and consult professionals to understand the extent of their coverage. If you have questions about the coverage available in your case, our experienced insurance claim attorneys can help you understand the process and the help available to you.

What Are the Requirements To Have a Claim Covered by LIGA?

For LIGA to cover your claim, it must meet several specific requirements. First and foremost, the insurance company in question must be insolvent, and the Louisiana Insurance Commissioner must officially order its liquidation. Only claims arising from policies issued by insolvent insurers are eligible. The claimant or policyholder must also be a resident of Louisiana at the time of the insured event, or the property damaged must reside permanently in the state.

The insurance company holding the policy covering the claim should have a license to operate within the state. LIGA does not cover claims from policies issued by insurers not authorized to conduct business in Louisiana. LIGA has financial limits set by state law. Therefore, in some cases, claimants might not receive the total amount they would expect to receive from their original insurance policy. This is sometimes the case when the damage is extensive, limiting the coverage to LIGA caps on payout.

Finally, before turning to LIGA for help, policyholders must exhaust all other possible avenues of recovery. This includes seeking payment from the insolvent insurer’s estate or another insurance policy that may cover the same loss. Meeting these requirements is essential to secure the protective benefits LIGA offers.

When Should You Contact Our Insurance Claim Lawyers?

If you encounter obstacles to your claim from your insurance company, such as lowball offers, unreasonable delays, or denial without investigation, you could benefit from consulting with our experienced legal representatives. We can provide legal advice, assess the merits of your case, and guide you through a LIGA claim. If your insurer has become insolvent, contact our team at Insurance Claim HQ to schedule your free case evaluation with our insurance claim lawyers.