What does "primary insurance" mean?

The term "primary insurance" refers to the first layer of insurance coverage that pays out for a claim before any other insurance or coverage comes into play. This means that when an insured event occurs, the primary insurance will be the first to respond, covering the losses or damages up to the limits of the policy. It is critical for policyholders to understand which policy is primary, as this determines which insurer will handle the claim first and how costs will be allocated among multiple policies.

This concept is particularly important in instances where a driver may have more than one insurance policy, such as if they have separate policies for personal use and commercial use of their vehicle. Understanding which policy is primary helps in ensuring claims are processed efficiently and appropriately. Other options do not accurately represent the definition of primary insurance; for instance, premium amounts or specific vehicle coverage types do not define the term itself, nor does it relate to workplace accidents specifically.