After the well-publicised collapse of Confederation Life, I am concerned about how safe my homeowners and automobile insurance money is, especially if I have a claim and the company goes bankrupt before I get paid. Would I still get my money? -- Weary with Worry

Dear Weary:

Worry no more! In the unlikely event that your insurance company does go under, the Property and Casualty Insurance Compensation Corporation (known as "PACICC" for short) will come to your rescue!

Although insurance company failures are very rare, they can -- and do -- happen, as the unfortunate policyholders of Confederation Life discovered. That is why the property and casualty insurers -- those companies that sell insurance for your homes, cars, and other property in Canada -- joined forces to fund the PACICC program as protection against insolvencies. It's sort of like insurance for your insurance, but you don't have to apply for this protection -- it's extended automatically.

If your insurer does fail, the first thing you should do is contact your agent or broker to have your policies replaced, so you will still have insurance protection. This must be done within 45 days of the date of the court order declaring the company bankrupt.

If you purchased your insurance directly from the company, rather than from an agent or broker, and you have a claim pending, notify the company's head office. The liquidator will write to all policyholders concerning claim procedures. PACICC will consider claims for events that occurred on or before the date of the bankruptcy, and for up to 45 days afterward. You may claim either directly from PACICC or directly from the liquidator. The advantage of claiming from PACICC is prompt payment. If you claim from the liquidator, on the other hand, be prepared for a potentially lengthy delay before you are paid any part of your claim.

There are limits on PACICC claims payouts, however. It will pay up to a maximum of $250,000 for unpaid claims for losses arising from a single occurrence. If your claim exceeds $250,000, you may eventually be reimbursed for all or part of the shortfall from funds released by the liquidator.

PACICC will also refund 70 per cent of the unexpired portion of your premium to a maximum payout of $700 per policy, applicable from the date of the insurer's collapse.

Back to Confederation Life: life insurance insolvencies are not covered by PACICC, but fall under a similar program for life & health insurers, called "CompCorp."

So you can rest easy, knowing that your policy and premium are protected. After all, insurance is supposed to bring you peace of mind! As the song goes, "Don't worry -- be happy." Even if all else fails, PACICC won't!