If an insurance company is declared bankrupt, the state guaranty association and guaranty fund swing into action. The association will transfer the insurer's policies to another insurance company or continue providing coverage itself for policyholders
Bankruptcy is a legal proceeding in which an individual or other entity unable to repay its debts to its creditors can seek the forgiveness of some or all of its debts. In most jurisdictions, bankruptcy is imposed by court order and is often initiated by the debtor.
“Bankruptcy” is one of the most misused terms. Bankruptcy and bankruptcy are actually two different things, although they are sometimes used to mean "broken" or bankrupt.A bankrupt is insolvent, but insolvency does not necessarily mean bankruptcy.
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