Primacy

What Does Primacy Mean?

Primacy refers to the determination of the primary insurer responsible for a claim when an insured individual holds two or more policies covering the same risk.

Insuranceopedia Explains Primacy

Primacy is a mechanism that prevents policyholders from profiting from their insurance coverage. Insurance is designed to cover a loss, not provide a financial gain. For instance, if a person with two auto insurance policies had their car totaled in an accident and both policies paid the claim in full, one policy would cover the loss while the payout from the other would effectively be a profit.

The primary policy is responsible for paying the claim, while secondary policies may provide compensation only after the primary coverage has been exhausted.