Should I Worry About The Company’s Financial Soundness?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jul 16, 2021

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Yes. Since insurance companies deal in financial guarantees, it is important that they be able to fulfill the promises they make to policyholders. Financial strength is the key to being able to deliver on their promises. There are thousands of insurance companies, and most are able to honor their policies. HOwever, a few companies fail every year. If your policy is with a failed company, it will probably be taken over and honored by a strong company even if your insurance company fails, but you could experience a period of claims not being paid and uncertainty about the outcome.

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