What Is Primary Insurance Coverage?

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Primary insurance typically applies first when an insurance claim is filed.
Primary insurance typically applies first when an insurance claim is filed. (Image: contract 20309 image by pablo from Fotolia.com)

Primary insurance can be defined as a policy that a person applies for and purchases directly for herself or is obtained through her employment. A primary policy is one under which the policyholder receives the majority of her insurance benefits in the event she is covered by more than one policy.

Function

Primary insurance is the coverage that goes into effect first when a policyholder files a claim. For example, a husband may be covered under a group health insurance policy where he works while also being listed as a dependent on his wife's insurance policy offered by her workplace. In these situations, the husband's work policy would be the source of primary coverage.

Considerations

When an individual is covered by more than one type of insurance policy, there is a possibility that coverages could overlap. To prevent the individual from collecting twice for the same claim, insurance policies include clauses that spell out when their coverage should be considered primary.

Benefits

Situations can arise where the limits of the primary policy are exhausted but the policyholder's claim still is not paid in full. The policyholder can benefit from having secondary coverage, which can pick up coverage where the primary policy leaves off.

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