What Is a Guarantor on an Insurance Policy?
A guarantor, also called a surety, is the individual who agrees to be responsible for someone else's obligations. In finance, a guarantor is colloquially known as a "co-signer." In insurance law, a guarantor has similar responsibilities as a co-signer, but for insurance liability purposes
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Function
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A guarantor is a person (or occasionally an entity) who promises to assume liability for certain costs for which the person's insurance company, called the obligor, would usually be responsible.
Who Guarantors Are
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The guarantor on an insurance policy is often the same person for whom the insurance policy was written. For example, if you have medical insurance through your employer for you, your spouse and your children, then you are the insured and most likely the guarantor.
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What Guarantors Do
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The guarantor on an insurance policy is financially responsible for things that the obligor does not cover, such as co-pays and prescription costs.
Guarantors and Denied Claims
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When an insurance company denies an insured's claim, the guarantor also becomes financially responsible for the claim. For example, if you visit your family physician and your insurer refuses to pay for the appointment, you must pay your physician the entire cost of the visit in addition to your usual co-pay.
Gap Coverage
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Some individuals also have gap coverage, colloquially known as "back-up insurance." In these cases, the secondary "back-up" insurance company becomes the guarantor of the primary insurance company in the event the insurer denies a claim.
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