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Frequent Questions

What is the Michigan Property & Casualty Guaranty Association?

The Michigan Property & Casualty Guaranty Association (MPCGA) is an unincorporated association of all property and casualty insurance companies authorized to transact insurance in Michigan. Membership in MPCGA is a condition for doing business in the state of Michigan. MPCGA was created by the Michigan Legislature in 1969 to protect the public against financial losses to Michigan policyholders and claimants as a result of insurance company insolvencies. MPCGA is not a state agency. It pays certain claims of insolvent insurance companies that were licensed to do business in the State of Michigan. A seven member Board of Governors, appointed by the Director of the Department of Insurance and Financial Services ("DIFS"), oversees MPCGA.

How is MPCGA different from an insurance company?

MPCGA is not an insurance company and does not write insurance policies or collect premiums. It is a nonprofit, unincorporated association that provides a limited safety net for Michigan policyholders and claimants when a member insurance company becomes insolvent.

Where does MPCGA get its funding?

MPCGA funds the payment of covered claims and its administrative expenses by assessing its member insurance companies based on a percentage of net direct premiums written in Michigan in particular covered lines of insurance as reported in the most recent annual statement available at the time of assessment. MPCGA also receives periodic distributions from insolvent estates and earnings from MPCGA’s investments. See the Assessment Information Section for more information.

What categories of insurance are covered by MPCGA?

MPCGA handles claims arising out of the following 5 categories of insurance:
  • Worker's compensation insurance
  • Automobile insurance
  • Title insurance
  • Fire, allied lines, farm owner's multiple peril, homeowner's multiple peril, inland marine, earthquake, and credit insurance
  • All other kinds of insurance except life and disability insurance, including but not limited to commercial multiple peril, ocean marine, financial guaranty, medical malpractice, products liability, aircraft, fidelity, burglary and theft, boiler and machinery
What categories of insurance are not covered by MPCGA?

MPCGA does not handle claims arising out of the following categories of insurance:
  • Life and disability insurance and annuity contracts (the Michigan Life and Health Insurance Guaranty Association covers these). You can contact the Michigan Life and Health Insurance Guaranty Association at:

    John C. Colpean, Administrator
    MLHIGA
    1640 Haslett Rd., Suite 160
    Haslett, MI 48840
    Telephone: (517) 339-4500
    Fax: (517) 339-5500
    Website: www.milifega.org

  • Surplus lines insurance, which is defined as insurance procurred from an insurer who is not authorized to transact insurance in Michigan but who is eligible to write insurance under the provisions of Chapter 19 of the Insurance Code, MCL 500.1901 et seq.
When does MPCGA become responsible for handling the claims of an insolvent insurance company?

When an insurance company licensed in Michigan is declared insolvent and a court enters a final order placing the company into liquidation and appointing a receiver, the MPCGA is triggered. The receiver or liquidator takes control of the insolvent company and may send notices to all insureds, claimants, and any other parties having an interest in the estate.

Claims that arise out of insurance policies of the insolvent company issued to residents of Michigan will be sent to MPCGA by the liquidator for review to determine if the claim qualifies as a “covered claim” as defined by the MPCGA Act and case law. See the Michigan Statute Section for more information.

If I have (or believe I have) an open claim already on file with the insolvent insurance company, do I need to file a claim with the MPCGA as well?

Yes. If you believe you may have an open claim on file with the insolvent insurance company, you should immediately complete and sign a Statement of Claim form with the MPCGA. A link to access the form is found on the home page; see the tab “Statement of Claim Form”. Upon receipt of the completed and signed Statement of Claim form, you will be contacted by the MPCGA.

What do I do if I received notice of a new claim against me or if I am served with a lawsuit?

If you believe you had insurance coverage for the claim or lawsuit with the insurance company now insolvent, you should immediately complete and sign a Statement of Claim form and submit it to the MPCGA along with a copy of any pertinent documents concerning the claim or lawsuit against you. A link to access the form can be found on the home page; see the tab “Statement of Claim Form”. Upon receipt of the completed and signed Statement of Claim, you will be contacted by the MPCGA.

What happens to cases that are pending in courts and administrative proceedings?

All proceedings in any court of law of this state to which the insolvent insurer is a party, or in which the insolvent insurer is obligated to defend or has assumed the defense of a party, are stayed for 6 months after the date a receiver is appointed, and for any additional time as determined by the court that has jurisdiction over those proceedings, to permit proper defense of all pending causes of action.

All proceedings in any administrative tribunal, including worker's compensation proceedings, to which the insolvent insurer is a party, or in which the insolvent insurer is obligated to defend or has assumed the defense of a party, are stayed for such length of time after the date a receiver is appointed, as determined by the administrative tribunal that has jurisdiction over those proceedings. The administrative tribunal shall grant a stay for each affected proceeding, as necessary, to provide the association with sufficient time to prepare a proper defense in the proceeding.

Is there a deadline to file a claim?

A claim must be presented to the liquidator or MPCGA on or before the last date fixed for the filing of claims as set forth by the liquidation court.

Am I still entitled to the same benefits under my policy?

In some situations you may not be able to recover all of your policy benefits from MPCGA. Because MPCGA is designed to be a limited safety net and does not provide a complete replacement for insurance coverage, the statute that governs MPCGA contains a number of limitations on the kinds and amounts of claims that MPCGA may pay. For example, with the exception of claims for worker's compensation benefits, there is a net worth provision as to which an insured must qualify to have a claim considered. In addition, a person seeking payment of a claim from MPCGA must first exhaust any rights he or she may have under any other insurance policy also providing coverage, and MPCGA is entitled to a credit for those amounts recoverable under another policy.

If you have a claim for policy benefits not covered by MPCGA, you may present that claim to the receiver or liquidator of the insolvent insurer. Such claims will be payable only to the extent that there are sufficient estate assets to pay them.

What is the net worth provision in the MPCGA Act?

Pursuant to the MPCGA Act, MPCGA may not handle claims of insureds whose net worth is greater than a certain amount. For companies liquidated in 2004 and 2005, the net worth limit is based on a formula set forth in a prior version of the Act. For companies liquidated in 2005, the net worth limit is $15,803,938. For companies liquidated in 2006, the maximum net worth limit s $15,731,100. As a result of passage of Public Act 362 of 2006, for insolvencies that occur on or after September 18, 2006, an insured will not be covered by MPCGA if its net worth exceeds $25,000,000 on the last day of the insured's last full fiscal year prior to the insurer's insolvency. MPCGA uses the aggregate net worth of the insured and all of its subsidiaries and affiliates as calculated on a consolidated basis. The $25,000,000 net worth limit will be adjusted on January 1 of each year to reflect cost of living changes, rounded to the nearest $10,000.

Are there any limits to the worker's compensation benefits that MPCGA can pay?

MPCGA can pay the full amount of a “covered claim” arising out of a worker's compensation claim under a worker's compensation policy. There is no cap on those benefits.

Will there be an interruption in my worker's compensation benefits?

MPCGA makes every effort to ensure that the payment of weekly worker's compensation benefits continues without interruption. However, our efforts are subject to the availability of claim files and necessary information from the insolvent company, and it is possible that there may be an interruption in your weekly benefits. In addition, our review of the file may result in a change in the amount or availability of benefits, in accordance with the Michigan Worker's Disability Compensation Act.

Are unearned premium claims covered?

Yes, the maximum amount of unearned premium refunds that constitute a covered claim is adjusted annually to reflect cost of living changes. For insolvencies occurring during the period 7/1/05 to 6/30/06, the maximum allowed unearned premium refund is $1,170. As a result of passage of Public Act 362 of 2006, unearned premium refunds of less than $50 will not be made on or after September 18, 2006. Unearned premium claims are subject to the net worth provision in the MPCGA Act.

If other insurance is available to cover my claim, how will my claim with MPCGA be affected?

If damages or benefits are recoverable by a claimant, other than from any disability policy or life insurance policy owned or paid for by the claimant, or by a claimant or insured under an insurance policy other than a policy of the insolvent insurer, or under a self-insured program of a self-insured entity, the damages or benefits recoverable are considered a credit against a covered claim. The claimant, insured, or self-insured entity is required to first exhaust all coverage provided by any policy or the self-insured retention of an excess insurance policy before looking to MPCGA for payment.