Reliant American Auto Insurance

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Company Details

Address:

PO Box 3608

City:
York
State:
PA
ZIP Code:
17402
Phone Number:
800-876-3350
Year Founded
1995
AM Best Rating:
In rehabilitation
Company Rating 0 (0 reviews)

Things to Remember...

  • As of November 2017, Reliant American Auto Insurance does not appear to be in business
  • The company was temporarily closed by the Texas Department of Insurance and was under financial rehabilitation, but evidently, it was unable to recover
  • Compare car insurance quotes for free and find a local Texas provider to save money

Note: Reliant American Auto Insurance is no longer in business as of November 2017.

A review of Reliant American Auto Insurance leads to a company that has been temporarily shut down by the Texas Department of Insurance. Unfortunately, the company was struggling financially and could not meet the claims of its customers. It was not weak enough to require shut down, but it did need a financial rehabilitation.

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A rehabilitation in business terms is different than a shutdown or bankruptcy. It is a legal term. A rehabilitation is not something that an auto insurance company can do itself. It has to be decided in a court of law or through an attorney’s office.

Typically it is the result of customer complaints or negative stock activity. Reliant American was served its rehabilitation by a Texas court.

Reliant American Auto Insurance and the Reliant American Rehabilitation

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In the case of insurance companies like Reliant American, rehabilitation comes about because these types of companies are monitored by a state agency.

In the case of Reliant American, the Texas Department of Insurance was monitoring the company’s financial status and also received a lot of customer complaints.

Once the order of rehabilitation is given by the court, the company has a specified amount of time to readjust their financial picture.

This can be done through layoffs, hiring new management, hiring a new CEO, liquidating assets, getting rid of bad debt, and filing for a financial assistant with the department of insurance in its state of origin.

Reliant American Auto Insurance and the Reliant American Clients

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During a rehabilitation, the clients of the company being rehabilitated have to be redirected. For some businesses, they can operate at some level and clients don’t even know a rehabilitation is taking place. But with the insurance industry, that is not the case.

Since auto insurance claims can be filed at any time and without warning, clients have to be directed to another insurance company.

In this case, the Texas Department of Insurance assigned the processing of claims and policy issues to Lincoln General Insurance Company.

Policies are held until the rehabilitation period ends or until Reliant American shuts down. The profits during this time belong to Lincoln General Insurance Company.

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Many times customers are not informed about the rehabilitation in plain language. They may receive a long legal letter that says claims are now being handled by a new company.

But even then, people usually don’t read these things thoroughly, they just assume the company made changes or changed hands and don’t ask questions.

In the event that Reliant American does not rehabilitate itself or does not meet the requirements given to them by the court, they can shut down or file for bankruptcy and reorganize into a new company.

Reliant has almost reached the end of its rehabilitation period and not much has changed in the financial picture of the company.

Reliant American Auto Insurance and Reliant American’s Additional Problems

With this particular rehabilitation, additional problems have arisen. Lincoln General Insurance Company has had its own financial problems that have nothing to do with taking on Reliant American clients. They have suffered their own financial issues due to overwriting policies and not having the assets to back up claims.

Lincoln General is now in the runoff. A runoff happens when a company sells off all of its assets, and business obligations to other companies so that if can officially shut down.

Some run offs are voluntary while others are involuntary or in other words, ordered by the state government.

Lincoln General is in a voluntary runoff. They are selling off the parts of the business that are solvent including customer policies.

This means that Reliant American policies are being sold off as well. The likelihood of Reliant retaining these after rehabilitation is slim. Customers will be notified and have the opportunity to choose another insurance company.

This is a rare case. Typically when a company is put into rehabilitation, their clients are referred to a very strong, reliable company that is financially secure.

Lincoln General was in that position at the beginning of the process but has since become financially unstable creating a unique situation that the Texas Department of Insurance is trying to work out.

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