All states in America have safety nets in readiness for those unfortunate circumstances. These are called guaranty funds or associations and they pay for the claims made by the customers of bankrupt insurance firm. Your state guaranty fund would settle the current claims up to a level set by each state and return a proportion of not used up premiums. Although it might be different in some states and it can change, upper claim limits are about $300,000. This figure is thought to be ample to cover most losses.
Normally customers do not have to inform the state authorities since they are automatically protected by such blanket funds. Every licensed insurance company has to take part in state safety net to conduct business in that state. People can confirm if a provider is licensed to sell auto insurance in their state in several ways including confirming the licence number displayed by the insurance firm.
If you have put in a claim already it would be paid by the state guaranty funds but it may be slower than average handling time. State insurance regulator would help customers switch their insurance to another carrier and answer customer inquiries. It would be advisable to find out what to do as soon as possible and arrange a new cover to avoid any extra problems.
If you want to lower the chance of becoming a victim of a bankrupt company you may find out the financial rating of that company before buying a policy from them. Rating is the sign of financial health of an insurer and several firms provide it.
Normally if you obtain similar quotes from alternative firms you might like to choose the safer one with a reputation to pay claims swiftly. That is why you need several quotes to see where companies stand in comparison with each other. If one provider comes up with considerably lower quote than all the rest, you might want to think again.
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