Policyholder Protection Act generally refers to state or national legislation designed to strengthen protections for insurance consumers, particularly in areas such as guaranty associations, receivership processes, and oversight of insurer financial strength. These laws aim to ensure that policyholders receive fair treatment and that covered claims are paid even if an insurer becomes insolvent, typically by improving coordination between regulators and guaranty funds. Specific provisions vary by jurisdiction but share a common goal of reinforcing confidence in the insurance system and safeguarding policyholders from carrier failures.

Advisors rarely cite the Policyholder Protection Act by name when meeting with clients but may reference state guaranty associations and regulatory safeguards more generally. Compliance and legal teams monitor such legislation because it affects insolvency procedures, guaranty coverage limits, and regulatory expectations. Understanding policyholder protection laws helps advisors answer client questions about what happens if an insurer fails and why carrier financial strength, diversification, and regulatory oversight all matter in long-term planning.