When two or more policies apply to the same loss, the one that pays first is called?

• A. Primary
• B. Secondary
• C. Tertiary
• D. Proximate

Answer: (A)

When several policies could cover the same loss, the payment order is determined by each policy’s coordination of benefits: the primary policy takes care of the loss first. It pays up to its limits and according to its terms, before any other applicable policy contributes. Only after the primary has paid what it owes (and if the loss exceeds its limits) would other policies—often called secondary or excess—kick in to cover the remaining amount, again subject to their own limits and provisions. Proximate cause is about what caused the loss, not which policy pays first, and tertiary refers to a third payer, not the initial one. So the policy that pays first is the primary policy. Example: if a homeowner’s policy and an umbrella both apply to a fire, the homeowner’s policy typically pays first, up to its limit, and the umbrella would pay only what's left if needed.