What is a primary policy?

The concept of a "primary policy" can best be understood when there exist two or more insurance policies that arguably provide coverage for the same occurrence. The "primary insurance" is the policy that is first responsible for the payment of claims.

A good example might be when a state requires that the owner of a motor vehicle to maintain what of often called "personal injury protection coverage" (a/k/a "no fault coverage"). That type of insurance pays a percentage of the injured insured's medical expenses and/or lost wages regardless of fault for the collision. If the injured insured also has major medical or hospitalization insurance, a primary/secondary insurance scenario develops. State statutory law or interpretative case law will dictate which is primary and which is secondary, but typically, the coverage specific to the occurrence (e.g. the auto-related insurance) will be primary until benefits are exhausted.

Primary/secondary insurance situations may also develop when insurance is required to be maintained by the terms of a contract between two or more parties. Often, the contract specifies which (or whose) insurance will be primary.