What type of policy pays first in the event of a covered loss?

A primary policy is designed to be the first source of coverage in the event of a covered loss. This means that when a claim arises, the primary policy will respond first, providing coverage as outlined in the terms of the policy. This is important for policyholders, as having a primary policy ensures that they have immediate access to benefits without needing to rely on other policies that may only kick in after the limits of the primary coverage are exhausted.

In contrast, a secondary policy would only provide coverage after the primary policy limits have been reached. An excess policy typically provides additional coverage beyond the primary policy, but it does not pay out until the primary coverage has been depleted. Supplemental policies often add coverage for specific items or situations that may not be adequately covered by primary policies but do not provide the initial layer of coverage that primary policies do.

Understanding the function of a primary policy is crucial for personal lines insurance, as it influences how individuals and families manage their insurance needs and the coverage available during loss events.