{"formats":[{"name":"JSON","format":"json","url":"\/downloads\/2025\/code-json\/38.2-1606.json"},{"name":"Plain Text","format":"text","url":"\/downloads\/2025\/code-text\/38.2-1606.txt"},{"name":"XML","format":"xml","url":"\/downloads\/2025\/code-xml\/38.2-1606.xml"},{"name":"HTML","format":"html","url":"\/downloads\/2025\/code-html\/38.2-1606.html"}],"law_id":72860,"edition_id":1,"section_id":72860,"structure_id":14435,"section_number":"38.2-1606","catch_line":"Duties and powers of Association","history":"1970, c. 766, \u00a7\u00a7 38.1-763, 38.1-765; 1971, Ex. Sess., c. 1; 1982, c. 353; 1983, c. 486; 1986, c. 562; 1987, cc. 529, 565, 655; 1998, c. 230.","full_text":"A\n\nThe Association shall:1\n\nBe obligated to pay covered claims that existed prior to the determination of insolvency and which arose before the earliest of (i) ninety-one days after the determination of insolvency, (ii) the policy expiration date, or (iii) the date the insured replaces or cancels the policy.\n\t\t\t\ta. Such obligation shall be satisfied by paying to the claimant an amount as follows:i\n\nThe full amount of a covered claim for benefits under a workers’ compensation insurance coverage; orii\n\nAn amount not exceeding $300,000 per claimant for all other covered claims.\n\t\t\t\t\t\tb. In no event shall the Association be obligated to pay a claimant for an amount in excess of the insolvent insurer’s obligation for a covered claim. Notwithstanding any other provision of this chapter, a covered claim shall not include any claim filed with the Guaranty Association after the final date set by the court for the filing of claims against the liquidator or receiver of an insolvent insurer. The Association shall pay only that amount of each unearned premium which is in excess of fifty dollars. A covered claim shall not include any claim filed with the Association after the final date set by the court for the filing of claims against the liquidator or receiver of an insolvent insurer.2\n\nBe deemed the insurer to the extent of the insolvent insurer’s obligation on the covered claims and to that extent shall have all the rights, duties, and obligations of the insolvent insurer as if the insurer had not become insolvent.3\n\nAllocate claims paid and expenses incurred among the three accounts and assess member insurers separately for each account (i) the amounts necessary to pay the obligations of the Association under subdivision 1 of this subsection subsequent to an insolvency, (ii) the expenses of handling covered claims subsequent to an insolvency, and (iii) other expenses authorized by this chapter. The assessment of each member insurer shall be based on the ratio of the net direct written premiums of the member insurer to the net direct written premiums of all member insurers. This ratio shall be determined using the premiums for the calendar year preceding the assessment on the classes of insurance in the account. Each member insurer shall be notified of the assessment at least thirty days before it is due. No member insurer may be assessed in any year on any account an amount greater than two percent of that member insurer’s net direct written premiums for the calendar year preceding the assessment on the classes of insurance in the account. If the sum of the maximum assessment and the assets of the account does not provide in any one year an amount sufficient to make all necessary payments from that account, the funds available shall be prorated and the unpaid portion shall be paid as soon as funds become available. The Association shall pay claims in any order which it may deem reasonable, including the payment of claims as such are received from the claimants or in groups or categories of claims. The Association may exempt or defer, in whole or in part, the assessment of any member insurer if payment of the assessment would cause the member insurer’s financial statement to reflect an impairment of the insurer’s minimum capital and surplus in any jurisdiction in which the member insurer is authorized to transact insurance; provided, that during the period of deferment, no dividends shall be paid to shareholders or policyholders. Deferred assessments shall be paid when the payments shall not cause an impairment of minimum capital and surplus. These payments shall be refunded to those members receiving larger assessments by virtue of the deferment, or at the election of any such company, credited against future assessments. Each member insurer may set off against any assessment, payments authorized by the Association and made on covered claims and expenses incurred in the payment of those claims. The offset shall be allowed only if the payments are chargeable to the account for which the assessment is made.\n\t\t\t\t3a. The Association shall issue to each insurer paying an assessment under this chapter, other than assessments paid pursuant to subdivision 3 (iii) of this subsection, a certificate of contribution in a form prescribed by the Commission, for the amount of the assessment paid, excluding interest penalties. All outstanding certificates shall be of equal priority without reference to amounts or dates of issue. A certificate of contribution may be shown by the insurer on its financial statement as an asset. This shall be shown in a form, in an amount, and for a period of time approved by the Commission.4\n\nInvestigate claims brought against the Association and adjust, compromise, settle, and pay covered claims to the extent of the Association’s obligation and deny all other claims. The Association may review settlements, releases and judgments to which the insolvent insurer or its insureds were parties to determine the extent to which the settlements, releases and judgments may be properly contested.5\n\nNotify those persons as the Commission directs under subdivision 8 of this subsection.6\n\nHandle claims through its employees or through one or more insurers or other persons designated as servicing facilities. Designation of a servicing facility is subject to (i) the approval of the Commission and (ii) acceptance by the designated insurer.7\n\nReimburse each servicing facility for the Association’s obligations paid by the facility and for expenses incurred by the facility while handling claims on behalf of the Association. The Association shall pay the other expenses authorized by this chapter.8\n\nNotify the insureds of the insolvent insurer and any other interested parties of the determination of insolvency and of their rights under this chapter. Notification shall be sent by mail to the insureds’ last known address. If the Association is unable to obtain the information required to mail the notice in a timely manner, the Association shall publish the notice in newspapers of general circulation likely to cover geographical areas occupied by the policyholders.B\n\nThe Association may:1\n\nEmploy or retain persons necessary to perform the duties of the Association.2\n\nBorrow funds necessary to effect the purposes of this chapter in accord with the plan of operation.3\n\nSue or be sued.4\n\nNegotiate and become a party to those contracts necessary to carry out the purpose of this chapter.5\n\nPerform any other acts necessary or proper to achieve the purpose of this chapter.6\n\nPay refunds to the member insurers in proportion to their contributions made to each account during the five years immediately preceding the date of the refund. The total refund shall be the amount by which the assets of the account are expected to exceed the liabilities for the coming year as determined by the board of directors.7\n\nObtain commitments or lines of credit, and in the event a natural disaster such as an earthquake, windstorm or fire results in covered claims, with the approval of its board of directors and the Commission, secure indebtedness for borrowed money to be used for the purpose set forth in subsection A of § 38.2-1622 in an amount not to exceed the amount reasonably estimated by its board of directors and the Commission as the aggregate amount of assessments which the Association will be authorized to make during the succeeding calendar year, by pledge, assignment, transfer in trust or hypothecation of any or all of the assessments to be made against its member insurers.","order_by":null,"text":{"0":{"id":262502,"text":"The Association shall:","type":"section","prefixes":["A"],"prefix":"A","entire_prefix":"A","prefix_anchor":"A","level":1,"next_prefix":"A1"},"1":{"id":262503,"text":"Be obligated to pay covered claims that existed prior to the determination of insolvency and which arose before the earliest of (i) ninety-one days after the determination of insolvency, (ii) the policy expiration date, or (iii) the date the insured replaces or cancels the policy.\n\t\t\t\ta. Such obligation shall be satisfied by paying to the claimant an amount as follows:","type":"section","prefixes":["A","1"],"prefix":"1","entire_prefix":"A1","prefix_anchor":"A1","level":2,"prior_prefix":"A","next_prefix":"A1i"},"2":{"id":262504,"text":"The full amount of a covered claim for benefits under a workers’ compensation insurance coverage; or","type":"section","prefixes":["A","1","i"],"prefix":"i","entire_prefix":"A1i","prefix_anchor":"A1i","level":3,"prior_prefix":"A1","next_prefix":"A1iii"},"3":{"id":262505,"text":"An amount not exceeding $300,000 per claimant for all other covered claims.\n\t\t\t\t\t\tb. In no event shall the Association be obligated to pay a claimant for an amount in excess of the insolvent insurer’s obligation for a covered claim. Notwithstanding any other provision of this chapter, a covered claim shall not include any claim filed with the Guaranty Association after the final date set by the court for the filing of claims against the liquidator or receiver of an insolvent insurer. The Association shall pay only that amount of each unearned premium which is in excess of fifty dollars. A covered claim shall not include any claim filed with the Association after the final date set by the court for the filing of claims against the liquidator or receiver of an insolvent insurer.","type":"section","prefixes":["A","1","i","ii"],"prefix":"ii","entire_prefix":"A1iii","prefix_anchor":"A1iii","level":4,"prior_prefix":"A1i","next_prefix":"A2"},"4":{"id":262506,"text":"Be deemed the insurer to the extent of the insolvent insurer’s obligation on the covered claims and to that extent shall have all the rights, duties, and obligations of the insolvent insurer as if the insurer had not become insolvent.","type":"section","prefixes":["A","2"],"prefix":"2","entire_prefix":"A2","prefix_anchor":"A2","level":2,"prior_prefix":"A1iii","next_prefix":"A3"},"5":{"id":262507,"text":"Allocate claims paid and expenses incurred among the three accounts and assess member insurers separately for each account (i) the amounts necessary to pay the obligations of the Association under subdivision 1 of this subsection subsequent to an insolvency, (ii) the expenses of handling covered claims subsequent to an insolvency, and (iii) other expenses authorized by this chapter. The assessment of each member insurer shall be based on the ratio of the net direct written premiums of the member insurer to the net direct written premiums of all member insurers. This ratio shall be determined using the premiums for the calendar year preceding the assessment on the classes of insurance in the account. Each member insurer shall be notified of the assessment at least thirty days before it is due. No member insurer may be assessed in any year on any account an amount greater than two percent of that member insurer’s net direct written premiums for the calendar year preceding the assessment on the classes of insurance in the account. If the sum of the maximum assessment and the assets of the account does not provide in any one year an amount sufficient to make all necessary payments from that account, the funds available shall be prorated and the unpaid portion shall be paid as soon as funds become available. The Association shall pay claims in any order which it may deem reasonable, including the payment of claims as such are received from the claimants or in groups or categories of claims. The Association may exempt or defer, in whole or in part, the assessment of any member insurer if payment of the assessment would cause the member insurer’s financial statement to reflect an impairment of the insurer’s minimum capital and surplus in any jurisdiction in which the member insurer is authorized to transact insurance; provided, that during the period of deferment, no dividends shall be paid to shareholders or policyholders. Deferred assessments shall be paid when the payments shall not cause an impairment of minimum capital and surplus. These payments shall be refunded to those members receiving larger assessments by virtue of the deferment, or at the election of any such company, credited against future assessments. Each member insurer may set off against any assessment, payments authorized by the Association and made on covered claims and expenses incurred in the payment of those claims. The offset shall be allowed only if the payments are chargeable to the account for which the assessment is made.\n\t\t\t\t3a. The Association shall issue to each insurer paying an assessment under this chapter, other than assessments paid pursuant to subdivision 3 (iii) of this subsection, a certificate of contribution in a form prescribed by the Commission, for the amount of the assessment paid, excluding interest penalties. All outstanding certificates shall be of equal priority without reference to amounts or dates of issue. A certificate of contribution may be shown by the insurer on its financial statement as an asset. This shall be shown in a form, in an amount, and for a period of time approved by the Commission.","type":"section","prefixes":["A","3"],"prefix":"3","entire_prefix":"A3","prefix_anchor":"A3","level":2,"prior_prefix":"A2","next_prefix":"A4"},"6":{"id":262508,"text":"Investigate claims brought against the Association and adjust, compromise, settle, and pay covered claims to the extent of the Association’s obligation and deny all other claims. The Association may review settlements, releases and judgments to which the insolvent insurer or its insureds were parties to determine the extent to which the settlements, releases and judgments may be properly contested.","type":"section","prefixes":["A","4"],"prefix":"4","entire_prefix":"A4","prefix_anchor":"A4","level":2,"prior_prefix":"A3","next_prefix":"A5"},"7":{"id":262509,"text":"Notify those persons as the Commission directs under subdivision 8 of this subsection.","type":"section","prefixes":["A","5"],"prefix":"5","entire_prefix":"A5","prefix_anchor":"A5","level":2,"prior_prefix":"A4","next_prefix":"A6"},"8":{"id":262510,"text":"Handle claims through its employees or through one or more insurers or other persons designated as servicing facilities. Designation of a servicing facility is subject to (i) the approval of the Commission and (ii) acceptance by the designated insurer.","type":"section","prefixes":["A","6"],"prefix":"6","entire_prefix":"A6","prefix_anchor":"A6","level":2,"prior_prefix":"A5","next_prefix":"A7"},"9":{"id":262511,"text":"Reimburse each servicing facility for the Association’s obligations paid by the facility and for expenses incurred by the facility while handling claims on behalf of the Association. The Association shall pay the other expenses authorized by this chapter.","type":"section","prefixes":["A","7"],"prefix":"7","entire_prefix":"A7","prefix_anchor":"A7","level":2,"prior_prefix":"A6","next_prefix":"A8"},"10":{"id":262512,"text":"Notify the insureds of the insolvent insurer and any other interested parties of the determination of insolvency and of their rights under this chapter. Notification shall be sent by mail to the insureds’ last known address. If the Association is unable to obtain the information required to mail the notice in a timely manner, the Association shall publish the notice in newspapers of general circulation likely to cover geographical areas occupied by the policyholders.","type":"section","prefixes":["A","8"],"prefix":"8","entire_prefix":"A8","prefix_anchor":"A8","level":2,"prior_prefix":"A7","next_prefix":"B"},"11":{"id":262513,"text":"The Association may:","type":"section","prefixes":["B"],"prefix":"B","entire_prefix":"B","prefix_anchor":"B","level":1,"prior_prefix":"A8","next_prefix":"B1"},"12":{"id":262514,"text":"Employ or retain persons necessary to perform the duties of the Association.","type":"section","prefixes":["B","1"],"prefix":"1","entire_prefix":"B1","prefix_anchor":"B1","level":2,"prior_prefix":"B","next_prefix":"B2"},"13":{"id":262515,"text":"Borrow funds necessary to effect the purposes of this chapter in accord with the plan of operation.","type":"section","prefixes":["B","2"],"prefix":"2","entire_prefix":"B2","prefix_anchor":"B2","level":2,"prior_prefix":"B1","next_prefix":"B3"},"14":{"id":262516,"text":"Sue or be sued.","type":"section","prefixes":["B","3"],"prefix":"3","entire_prefix":"B3","prefix_anchor":"B3","level":2,"prior_prefix":"B2","next_prefix":"B4"},"15":{"id":262517,"text":"Negotiate and become a party to those contracts necessary to carry out the purpose of this chapter.","type":"section","prefixes":["B","4"],"prefix":"4","entire_prefix":"B4","prefix_anchor":"B4","level":2,"prior_prefix":"B3","next_prefix":"B5"},"16":{"id":262518,"text":"Perform any other acts necessary or proper to achieve the purpose of this chapter.","type":"section","prefixes":["B","5"],"prefix":"5","entire_prefix":"B5","prefix_anchor":"B5","level":2,"prior_prefix":"B4","next_prefix":"B6"},"17":{"id":262519,"text":"Pay refunds to the member insurers in proportion to their contributions made to each account during the five years immediately preceding the date of the refund. The total refund shall be the amount by which the assets of the account are expected to exceed the liabilities for the coming year as determined by the board of directors.","type":"section","prefixes":["B","6"],"prefix":"6","entire_prefix":"B6","prefix_anchor":"B6","level":2,"prior_prefix":"B5","next_prefix":"B7"},"18":{"id":262520,"text":"Obtain commitments or lines of credit, and in the event a natural disaster such as an earthquake, windstorm or fire results in covered claims, with the approval of its board of directors and the Commission, secure indebtedness for borrowed money to be used for the purpose set forth in subsection A of § 38.2-1622 in an amount not to exceed the amount reasonably estimated by its board of directors and the Commission as the aggregate amount of assessments which the Association will be authorized to make during the succeeding calendar year, by pledge, assignment, transfer in trust or hypothecation of any or all of the assessments to be made against its member insurers.","type":"section","prefixes":["B","7"],"prefix":"7","entire_prefix":"B7","prefix_anchor":"B7","level":2,"prior_prefix":"B6"}},"ancestry":[{"id":14435,"edition_id":1,"name":"Establishment and Operation of the Association","identifier":"1","label":"article","depth":3,"order_by":1,"parent_id":12868,"metadata":{},"date_created":"2026-06-26 03:48:08","date_modified":"2026-06-26 03:48:08","permalink":{"id":212213,"object_type":"structure","relational_id":14435,"identifier":"1","token":"38.2\/16\/1","url":"\/38.2\/16\/1\/","edition_id":1,"permalink":0,"preferred":1}},{"id":12868,"edition_id":1,"name":"Virginia Property and Casualty Insurance Guaranty Association","identifier":"16","label":"chapter","depth":2,"order_by":1,"parent_id":12698,"metadata":{},"date_created":"2026-06-26 03:43:57","date_modified":"2026-06-26 03:43:57","permalink":{"id":212211,"object_type":"structure","relational_id":12868,"identifier":"16","token":"38.2\/16","url":"\/38.2\/16\/","edition_id":1,"permalink":0,"preferred":1}},{"id":12698,"edition_id":1,"name":"Insurance","identifier":"38.2","label":"title","depth":1,"order_by":1,"parent_id":null,"metadata":{},"date_created":"2026-06-26 03:43:49","date_modified":"2026-06-26 03:43:49","permalink":{"id":210661,"object_type":"structure","relational_id":12698,"identifier":"38.2","token":"38.2","url":"\/38.2\/","edition_id":1,"permalink":0,"preferred":1}}],"structure_contents":[{"id":69368,"structure_id":14435,"section_number":"38.2-1600","catch_line":"Purpose","url":"\/38.2-1600\/","token":"38.2\/16\/1\/38.2-1600","metadata":false},{"id":82396,"structure_id":14435,"section_number":"38.2-1601","catch_line":"Application","url":"\/38.2-1601\/","token":"38.2\/16\/1\/38.2-1601","metadata":false},{"id":77832,"structure_id":14435,"section_number":"38.2-1602","catch_line":"Liberal construction","url":"\/38.2-1602\/","token":"38.2\/16\/1\/38.2-1602","metadata":false},{"id":81301,"structure_id":14435,"section_number":"38.2-1603","catch_line":"Definitions","url":"\/38.2-1603\/","token":"38.2\/16\/1\/38.2-1603","metadata":false},{"id":86917,"structure_id":14435,"section_number":"38.2-1604","catch_line":"Association created; members; divided into three accounts","url":"\/38.2-1604\/","token":"38.2\/16\/1\/38.2-1604","metadata":false},{"id":71289,"structure_id":14435,"section_number":"38.2-1605","catch_line":"Board of directors","url":"\/38.2-1605\/","token":"38.2\/16\/1\/38.2-1605","metadata":false},{"id":72860,"structure_id":14435,"section_number":"38.2-1606","catch_line":"Duties and powers of Association","url":"\/38.2-1606\/","token":"38.2\/16\/1\/38.2-1606","metadata":false},{"id":72859,"structure_id":14435,"section_number":"38.2-1607","catch_line":"Plan of operation","url":"\/38.2-1607\/","token":"38.2\/16\/1\/38.2-1607","metadata":false},{"id":83949,"structure_id":14435,"section_number":"38.2-1608","catch_line":"Duties and powers of Commission; judicial review","url":"\/38.2-1608\/","token":"38.2\/16\/1\/38.2-1608","metadata":false},{"id":57575,"structure_id":14435,"section_number":"38.2-1609","catch_line":"Insured's rights and liabilities; settlements binding on receiver or liquidator; priority of claims; statements to be filed with receiver or liquidator","url":"\/38.2-1609\/","token":"38.2\/16\/1\/38.2-1609","metadata":false},{"id":68508,"structure_id":14435,"section_number":"38.2-1610","catch_line":"Exhaustion of remedies under policy; claims recoverable from more than one association","url":"\/38.2-1610\/","token":"38.2\/16\/1\/38.2-1610","metadata":false},{"id":85806,"structure_id":14435,"section_number":"38.2-1611","catch_line":"Aids in detection and prevention of insurer insolvencies","url":"\/38.2-1611\/","token":"38.2\/16\/1\/38.2-1611","metadata":false},{"id":83184,"structure_id":14435,"section_number":"38.2-1611.1","catch_line":"Tax write-offs of certificates of contribution","url":"\/38.2-1611.1\/","token":"38.2\/16\/1\/38.2-1611.1","metadata":false},{"id":60574,"structure_id":14435,"section_number":"38.2-1612","catch_line":"Examination and regulation of Association by Commission; annual financial report","url":"\/38.2-1612\/","token":"38.2\/16\/1\/38.2-1612","metadata":false},{"id":80495,"structure_id":14435,"section_number":"38.2-1613","catch_line":"Exemption from payment of fees and taxes","url":"\/38.2-1613\/","token":"38.2\/16\/1\/38.2-1613","metadata":false},{"id":72837,"structure_id":14435,"section_number":"38.2-1614","catch_line":"Repealed","url":"\/38.2-1614\/","token":"38.2\/16\/1\/38.2-1614","metadata":false},{"id":58179,"structure_id":14435,"section_number":"38.2-1615","catch_line":"No liability for action taken in good faith","url":"\/38.2-1615\/","token":"38.2\/16\/1\/38.2-1615","metadata":false},{"id":55799,"structure_id":14435,"section_number":"38.2-1616","catch_line":"Stay of proceedings against insolvent insurer; setting aside judgment, etc.; access to records","url":"\/38.2-1616\/","token":"38.2\/16\/1\/38.2-1616","metadata":false},{"id":82413,"structure_id":14435,"section_number":"38.2-1617","catch_line":"Termination of operation of Association; expiration of chapter","url":"\/38.2-1617\/","token":"38.2\/16\/1\/38.2-1617","metadata":false}],"previous_section":{"id":71289,"structure_id":14435,"section_number":"38.2-1605","catch_line":"Board of directors","url":"\/38.2-1605\/","token":"38.2\/16\/1\/38.2-1605","metadata":false},"next_section":{"id":72859,"structure_id":14435,"section_number":"38.2-1607","catch_line":"Plan of operation","url":"\/38.2-1607\/","token":"38.2\/16\/1\/38.2-1607","metadata":false},"metadata":false,"official_url":"https:\/\/law.lis.virginia.gov\/vacode\/38.2-1606\/","history_text":"

This law was first created in 1970. The record of its establishment is cataloged in chapter 766 of that year\u2019s edition of \u201cActs of Assembly,\u201d the annual state publication listing all changes made to the Code of Virginia in that year. Unfortunately, the 1970 \u201cActs\u201d aren\u2019t available online. It has been modified 5 times. Those modifications are cataloged by \u201cThe Acts of Assembly,\u201d a state publication, by year and chapter. Those modifications that can be read on the General Assembly\u2019s website will be linked accordingly. Those modifications are as follows: in 1982, chapter 353; in 1983, chapter 486; in 1986, chapter 562; in 1987, chapters 529, 565, and 655; in 1998, chapter 230<\/a>.<\/p>","references":[{"id":58210,"section_number":"38.2-1442","catch_line":"Guaranty association obligations","order_by":null,"url":"\/38.2-1442\/"},{"id":81301,"section_number":"38.2-1603","catch_line":"Definitions","order_by":null,"url":"\/38.2-1603\/"},{"id":72859,"section_number":"38.2-1607","catch_line":"Plan of operation","order_by":null,"url":"\/38.2-1607\/"},{"id":83184,"section_number":"38.2-1611.1","catch_line":"Tax write-offs of certificates of contribution","order_by":null,"url":"\/38.2-1611.1\/"},{"id":55492,"section_number":"38.2-1618","catch_line":"Purpose and applicability of article","order_by":null,"url":"\/38.2-1618\/"},{"id":54201,"section_number":"38.2-1620","catch_line":"Financing the safety fund, maximum amount, distribution of excess","order_by":null,"url":"\/38.2-1620\/"},{"id":65559,"section_number":"38.2-1622","catch_line":"Use of safety fund, repayment, etc","order_by":null,"url":"\/38.2-1622\/"}],"refers_to":[{"id":65559,"section_number":"38.2-1622","catch_line":"Use of safety fund, repayment, etc","order_by":null,"url":"\/38.2-1622\/"}],"permalink":{"id":212239,"object_type":"law","relational_id":72860,"identifier":"38.2-1606","token":"38.2\/16\/1\/38.2-1606","url":"\/38.2-1606\/","edition_id":1,"permalink":0,"preferred":1},"url":"\/38.2-1606\/","token":"38.2\/16\/1\/38.2-1606","dublin_core":{"Title":"Duties and powers of Association","Type":"Text","Format":"text\/html","Identifier":"\u00a7 38.2-1606","Relation":"Code of Virginia"},"html":"\n\t\t\t\t\t\t

A.<\/span> The Association<\/span> shall: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> Be obligated to pay covered claims<\/span> that existed prior to the determination of insolvency and which arose before the earliest of (i) ninety-one days after the determination of insolvency, (ii) the policy expiration date, or (iii) the date the insured replaces or cancels the policy.\n\t\t\t\ta. Such obligation shall be satisfied by paying to the claimant<\/span> an amount as follows: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

i.<\/span> The full amount of a covered claim<\/span> for benefits under a workers’ compensation insurance<\/span> coverage; or <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

ii.<\/span> An amount not exceeding $300,000 per claimant<\/span> for all other covered claims<\/span>.\n\t\t\t\t\t\tb. In no event shall the Association<\/span> be obligated to pay a claimant<\/span> for an amount in excess of the insolvent insurer<\/span>’s obligation for a covered claim<\/span>. Notwithstanding any other provision of this chapter, a covered claim<\/span> shall not include any claim filed with the Guaranty Association<\/span> after the final date set by the court<\/span> for the filing of claims against the liquidator or receiver of an insolvent insurer<\/span>. The Association<\/span> shall pay only that amount of each unearned premium which is in excess of fifty dollars. A covered claim<\/span> shall not include any claim filed with the Association<\/span> after the final date set by the court<\/span> for the filing of claims against the liquidator or receiver of an insolvent insurer<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> Be deemed the insurer to the extent of the insolvent insurer<\/span>’s obligation on the covered claims<\/span> and to that extent shall have all the rights, duties, and obligations of the insolvent insurer<\/span> as if the insurer had not become insolvent. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

3.<\/span> Allocate claims paid and expenses incurred among the three accounts<\/span> and assess member insurers<\/span> separately for each account<\/span> (i) the amounts necessary to pay the obligations of the Association<\/span> under subdivision 1 of this subsection subsequent to an insolvency, (ii) the expenses of handling covered claims<\/span> subsequent to an insolvency, and (iii) other expenses authorized by this chapter. The assessment of each member insurer<\/span> shall be based on the ratio of the net direct written premiums<\/span> of the member insurer<\/span> to the net direct written premiums<\/span> of all member insurers<\/span>. This ratio shall be determined using the premiums for the calendar year preceding the assessment on the classes of insurance<\/span> in the account<\/span>. Each member insurer<\/span> shall be notified of the assessment at least thirty days before it is due. No member insurer<\/span> may be assessed in any year on any account<\/span> an amount greater than two percent of that member insurer<\/span>’s net direct written premiums<\/span> for the calendar year preceding the assessment on the classes of insurance<\/span> in the account<\/span>. If the sum of the maximum assessment and the assets<\/span> of the account<\/span> does not provide in any one year an amount sufficient to make all necessary payments from that account<\/span>, the funds available shall be prorated and the unpaid portion shall be paid as soon as funds become available. The Association<\/span> shall pay claims in any order<\/span> which it may deem reasonable, including the payment of claims as such are received from the claimants<\/span> or in groups or categories of claims. The Association<\/span> may exempt or defer, in whole or in part, the assessment of any member insurer<\/span> if payment of the assessment would cause the member insurer<\/span>’s financial statement to reflect an impairment of the insurer’s minimum capital and surplus in any jurisdiction<\/span> in which the member insurer<\/span> is authorized to transact insurance<\/span>; provided, that during the period of deferment, no dividends shall be paid to shareholders or policyholders. Deferred assessments shall be paid when the payments shall not cause an impairment of minimum capital and surplus. These payments shall be refunded to those members receiving larger assessments by virtue of the deferment, or at the election of any such company<\/span>, credited against future assessments. Each member insurer<\/span> may set off against any assessment, payments authorized by the Association<\/span> and made on covered claims<\/span> and expenses incurred in the payment of those claims. The offset shall be allowed only if the payments are chargeable to the account<\/span> for which the assessment is made.\n\t\t\t\t3a. The Association<\/span> shall issue<\/span> to each insurer paying an assessment under this chapter, other than assessments paid pursuant to subdivision 3 (iii) of this subsection, a certificate of contribution in a form prescribed by the Commission<\/span>, for the amount of the assessment paid, excluding interest penalties. All outstanding certificates shall be of equal priority without reference to amounts or dates of issue<\/span>. A certificate of contribution may be shown by the insurer on its financial statement as an asset. This shall be shown in a form, in an amount, and for a period of time approved by the Commission<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

4.<\/span> Investigate claims brought against the Association<\/span> and adjust, compromise, settle, and pay covered claims<\/span> to the extent of the Association<\/span>’s obligation and deny all other claims. The Association<\/span> may review settlements<\/span>, releases and judgments<\/span> to which the insolvent insurer<\/span> or its insureds were parties to determine the extent to which the settlements<\/span>, releases and judgments<\/span> may be properly contested. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

5.<\/span> Notify those persons<\/span> as the Commission<\/span> directs under subdivision 8 of this subsection. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

6.<\/span> Handle claims through its employees or through one or more insurers or other persons<\/span> designated as servicing facilities. Designation of a servicing facility is subject to (i) the approval of the Commission<\/span> and (ii) acceptance by the designated insurer. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

7.<\/span> Reimburse each servicing facility for the Association<\/span>’s obligations paid by the facility and for expenses incurred by the facility while handling claims on behalf of the Association<\/span>. The Association<\/span> shall pay the other expenses authorized by this chapter. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

8.<\/span> Notify the insureds of the insolvent insurer<\/span> and any other interested parties of the determination of insolvency and of their rights under this chapter. Notification shall be sent by mail to the insureds’ last known address. If the Association<\/span> is unable to obtain the information required to mail the notice in a timely manner, the Association<\/span> shall publish the notice in newspapers of general circulation likely to cover geographical areas occupied by the policyholders. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

B.<\/span> The Association<\/span> may: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> Employ or retain persons<\/span> necessary to perform the duties of the Association<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> Borrow funds necessary to effect the purposes of this chapter in accord with the plan of operation. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

3.<\/span> Sue or be sued. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

4.<\/span> Negotiate and become a party<\/span> to those contracts<\/span> necessary to carry out the purpose of this chapter. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

5.<\/span> Perform any other acts necessary or proper to achieve the purpose of this chapter. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

6.<\/span> Pay refunds to the member insurers<\/span> in proportion to their contributions made to each account<\/span> during the five years immediately preceding the date of the refund. The total refund shall be the amount by which the assets<\/span> of the account<\/span> are expected to exceed the liabilities for the coming year as determined by the board of directors. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

7.<\/span> Obtain commitments or lines of credit, and in the event a natural disaster such as an earthquake, windstorm or fire results in covered claims<\/span>, with the approval of its board of directors and the Commission<\/span>, secure indebtedness for borrowed money to be used for the purpose set forth in subsection A of § 38.2-1622<\/a> in an amount not to exceed the amount reasonably estimated by its board of directors and the Commission<\/span> as the aggregate amount of assessments which the Association<\/span> will be authorized to make during the succeeding calendar year, by pledge, assignment, transfer in trust or hypothecation of any or all of the assessments to be made against its member insurers<\/span>. <\/i><\/a><\/p><\/section>","plain_text":" CODE OF VIRGINIA\n\nDUTIES AND POWERS OF ASSOCIATION (\u00a7 38.2-1606)\n\nA. The Association shall:\n\n 1. Be obligated to pay covered claims that existed prior to the determination\n of insolvency and which arose before the earliest of (i) ninety-one days after\n the determination of insolvency, (ii) the policy expiration date, or (iii) the\n date the insured replaces or cancels the policy.\n \t\t\t\ta. Such obligation shall be satisfied by paying to the claimant an amount\n as follows:\n\n i. The full amount of a covered claim for benefits under a workers’\n compensation insurance coverage; or\n\n ii. An amount not exceeding $300,000 per claimant for all other covered\n claims.\n \t\t\t\t\t\tb. In no event shall the Association be obligated to pay a claimant\n for an amount in excess of the insolvent insurer’s obligation for a\n covered claim. Notwithstanding any other provision of this chapter, a\n covered claim shall not include any claim filed with the Guaranty\n Association after the final date set by the court for the filing of claims\n against the liquidator or receiver of an insolvent insurer. The\n Association shall pay only that amount of each unearned premium which is\n in excess of fifty dollars. A covered claim shall not include any claim\n filed with the Association after the final date set by the court for the\n filing of claims against the liquidator or receiver of an insolvent\n insurer.\n\n 2. Be deemed the insurer to the extent of the insolvent insurer’s\n obligation on the covered claims and to that extent shall have all the rights,\n duties, and obligations of the insolvent insurer as if the insurer had not\n become insolvent.\n\n 3. Allocate claims paid and expenses incurred among the three accounts and\n assess member insurers separately for each account (i) the amounts necessary\n to pay the obligations of the Association under subdivision 1 of this\n subsection subsequent to an insolvency, (ii) the expenses of handling covered\n claims subsequent to an insolvency, and (iii) other expenses authorized by\n this chapter. The assessment of each member insurer shall be based on the\n ratio of the net direct written premiums of the member insurer to the net\n direct written premiums of all member insurers. This ratio shall be determined\n using the premiums for the calendar year preceding the assessment on the\n classes of insurance in the account. Each member insurer shall be notified of\n the assessment at least thirty days before it is due. No member insurer may be\n assessed in any year on any account an amount greater than two percent of that\n member insurer’s net direct written premiums for the calendar year\n preceding the assessment on the classes of insurance in the account. If the\n sum of the maximum assessment and the assets of the account does not provide\n in any one year an amount sufficient to make all necessary payments from that\n account, the funds available shall be prorated and the unpaid portion shall be\n paid as soon as funds become available. The Association shall pay claims in\n any order which it may deem reasonable, including the payment of claims as\n such are received from the claimants or in groups or categories of claims. The\n Association may exempt or defer, in whole or in part, the assessment of any\n member insurer if payment of the assessment would cause the member\n insurer’s financial statement to reflect an impairment of the\n insurer’s minimum capital and surplus in any jurisdiction in which the\n member insurer is authorized to transact insurance; provided, that during the\n period of deferment, no dividends shall be paid to shareholders or\n policyholders. Deferred assessments shall be paid when the payments shall not\n cause an impairment of minimum capital and surplus. These payments shall be\n refunded to those members receiving larger assessments by virtue of the\n deferment, or at the election of any such company, credited against future\n assessments. Each member insurer may set off against any assessment, payments\n authorized by the Association and made on covered claims and expenses incurred\n in the payment of those claims. The offset shall be allowed only if the\n payments are chargeable to the account for which the assessment is made.\n \t\t\t\t3a. The Association shall issue to each insurer paying an assessment under\n this chapter, other than assessments paid pursuant to subdivision 3 (iii) of\n this subsection, a certificate of contribution in a form prescribed by the\n Commission, for the amount of the assessment paid, excluding interest\n penalties. All outstanding certificates shall be of equal priority without\n reference to amounts or dates of issue. A certificate of contribution may be\n shown by the insurer on its financial statement as an asset. This shall be\n shown in a form, in an amount, and for a period of time approved by the\n Commission.\n\n 4. Investigate claims brought against the Association and adjust, compromise,\n settle, and pay covered claims to the extent of the Association’s\n obligation and deny all other claims. The Association may review settlements,\n releases and judgments to which the insolvent insurer or its insureds were\n parties to determine the extent to which the settlements, releases and\n judgments may be properly contested.\n\n 5. Notify those persons as the Commission directs under subdivision 8 of this\n subsection.\n\n 6. Handle claims through its employees or through one or more insurers or\n other persons designated as servicing facilities. Designation of a servicing\n facility is subject to (i) the approval of the Commission and (ii) acceptance\n by the designated insurer.\n\n 7. Reimburse each servicing facility for the Association’s obligations\n paid by the facility and for expenses incurred by the facility while handling\n claims on behalf of the Association. The Association shall pay the other\n expenses authorized by this chapter.\n\n 8. Notify the insureds of the insolvent insurer and any other interested\n parties of the determination of insolvency and of their rights under this\n chapter. Notification shall be sent by mail to the insureds’ last known\n address. If the Association is unable to obtain the information required to\n mail the notice in a timely manner, the Association shall publish the notice\n in newspapers of general circulation likely to cover geographical areas\n occupied by the policyholders.\n\nB. The Association may:\n\n 1. Employ or retain persons necessary to perform the duties of the\n Association.\n\n 2. Borrow funds necessary to effect the purposes of this chapter in accord\n with the plan of operation.\n\n 3. Sue or be sued.\n\n 4. Negotiate and become a party to those contracts necessary to carry out the\n purpose of this chapter.\n\n 5. Perform any other acts necessary or proper to achieve the purpose of this\n chapter.\n\n 6. Pay refunds to the member insurers in proportion to their contributions\n made to each account during the five years immediately preceding the date of\n the refund. The total refund shall be the amount by which the assets of the\n account are expected to exceed the liabilities for the coming year as\n determined by the board of directors.\n\n 7. Obtain commitments or lines of credit, and in the event a natural disaster\n such as an earthquake, windstorm or fire results in covered claims, with the\n approval of its board of directors and the Commission, secure indebtedness for\n borrowed money to be used for the purpose set forth in subsection A of §\n 38.2-1622 in an amount not to exceed the amount reasonably estimated by its\n board of directors and the Commission as the aggregate amount of assessments\n which the Association will be authorized to make during the succeeding\n calendar year, by pledge, assignment, transfer in trust or hypothecation of\n any or all of the assessments to be made against its member insurers.\n\nHISTORY: 1970, c. 766, \u00a7\u00a7 38.1-763, 38.1-765; 1971, Ex. Sess., c. 1; 1982, c.\n353; 1983, c. 486; 1986, c. 562; 1987, cc. 529, 565, 655; 1998, c. 230.","edition":{"id":1,"name":"2025","slug":"2025","date_created":"2026-06-21 22:39:22","date_modified":"2026-06-21 22:39:22","current":1,"order_by":1,"last_import":null}}