What constitutes a covered claim?

A covered claim refers to an unpaid claim that falls within the terms and conditions of a particular policy and arises from certain circumstances, often associated with the insolvency of an insurer. In this context, option B is valid because it specifically highlights an unpaid claim that exists within the coverage limits of an insurer that is declared insolvent.

When an insurer loses its ability to pay its claims due to insolvency, the state may provide a mechanism to fulfill those claims to protect policyholders. This process usually involves a guaranty association or similar entity that steps in to cover claims that the insolvent insurer would have paid. This ensures that policyholders are not left without recourse merely because their insurer can no longer financially support their obligations.

The other options do not accurately define a covered claim as per the standard definitions used in insurance practices. For instance, an unpaid claim from a vehicle accident could be a covered claim if the insurer is solvent and the policy is valid; however, it is not a generalized definition. Similarly, claims made by member insurers against affiliates or all claims made in the state regardless of affiliation do not provide the specific conditions under which a claim would be recognized as a covered claim.