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Washington State Office of the Insurance Commissioner

What happens when your insurance company is financially troubled

Every wonder what would happen if your insurance company "went under?" This is very rare. But if it happens, we have a plan.

Steps we take

Depending on the degree of the problem, we may:

  • Suspend or stop an insurance company from selling new policies until it fixes its problems. This suspension only impacts new business. It does not impact existing customers.
  • Ask a court for a rehabilitation order. This allows us to step in to run the company and try to improve the financial situation.
  • Ask a court for a liquidation order if we can't fix financial situation. This forces the company out of business and all their policies go to another insurance company that we choose or to one of our state's Guaranty Associations.

Out-of-state insurance companies

If your insurance company is based in another state, then that state's insurance department will step in if the company has financial issues. Many Washington state consumers experienced this with their Penn Treaty long-term care policies.

What's a Guaranty Association and how does it work?

When a company goes into liquidation, we may refer policies to one of two Guaranty Associations to pay claims:

  • Auto, home, business and related types of insurance - the Guaranty Association will only pay up to the policy limit, or up to $300,000, whichever is lower.
  • Life, health and long-term care insurance, or annuities - the Guaranty Association will only pay up to the policy limit, or up to $500,000, whichever is lower.

The money Guaranty Associations use to pay claims comes from insurance companies, not the state.

State law requires most licensed insurers to belong to Guaranty Associations.

Guaranty Association contact information

Auto, home and business insurance:

Western Guaranty Fund Services

1720 S. Bellaire

Suite 408

Denver CO 80222

1-800-303-7565


Life, health and long-term care insurance, and annuities:

Washington Life & Disability Guaranty Association

P.O. Box 2292

Shelton WA 98584

360-426-6744




Updated 01/27/2012

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Need more help? Call our FREE Insurance Consumer Hotline at 1-800-562-6900
or Email us at cap@oic.wa.gov.