What is a "primary policy" in insurance terms?

A "primary policy" in insurance refers to the main coverage under which claims are first paid. This means that when a loss occurs, the primary policy responds before any other insurance coverage comes into play. For instance, if an insured individual has multiple policies that cover the same risk, the primary policy will be the one that covers the claim up to its limits first, and only after its limits are exhausted will secondary or excess coverage kick in.

This definition highlights the important role of primary policies in the hierarchy of insurance coverage. A primary policy ensures that the insured has immediate access to benefits, making it critical in times of loss or damage. Understanding this concept is essential for navigating the insurance landscape effectively, as it impacts how claims are processed and the responsibilities of each insurer involved.