26. Which statement regarding the Alabama Insurance Guaranty Association is FALSE?
Answer: B
Only Alabama-domiciled insurers belong to the Alabama Insurance Guaranty Association
This statement is false because the Alabama Insurance Guaranty Association includes both Alabama-domiciled insurers and those insurers that are licensed to operate in Alabama, regardless of their state of domicile.
A) The Alabama Insurance Guaranty Association exists to protect Alabama residents in the event a property and casualty insurer becomes insolvent
This statement is true. The primary purpose of the Alabama Insurance Guaranty Association is to protect policyholders by ensuring that they can collect on claims if their property and casualty insurer becomes insolvent.
B) Only Alabama-domiciled insurers belong to the Alabama Insurance Guaranty Association
This statement is false. The association is not limited to only Alabama-domiciled insurers; it also includes insurers that are licensed to operate in Alabama, which makes this option incorrect.
C) In case of an insurer insolvency, all admitted insurers are assessed an amount necessary to pay claims of the insolvent insurer
This statement is true. When an insurer becomes insolvent, all admitted insurers in Alabama are indeed assessed to contribute to the payment of claims owed by the insolvent insurer, ensuring that policyholders receive their entitled benefits.
D) The Alabama Insurance Guaranty Association is obligated to pay eligible claims of insolvent insurers in excess of $100 and up to $150000
This statement is true. The association is mandated to cover eligible claims within the specified range, providing financial protection to policyholders affected by the insolvency of their insurers.
Conclusion
The false statement regarding the Alabama Insurance Guaranty Association is that only Alabama-domiciled insurers belong to it. In reality, the association includes all insurers that are licensed to operate in Alabama, making option B incorrect. Other statements accurately reflect the functions and obligations of the association, confirming that they are true and highlighting the protective role it plays for policyholders.