Which concept indicates the primary insurer pays first before excess coverage applies?

Which concept indicates the primary insurer pays first before excess coverage applies?

• A. Primary and Excess
• B. Limit of Liability
• C. Aggregate
• D. Per Person

Answer: (A)

When there are multiple layers of liability coverage, the primary policy pays first and only after its limit is reached does the excess policy come into play. This layering means the primary insurer covers losses up to its limit, and any amount beyond that is picked up by the excess coverage (assuming its limits aren’t exhausted). For example, if a claim totals 250,000 and the primary limit is 100,000, the primary pays 100,000 and the excess would cover the remaining 150,000, up to its own limit. The other terms describe how much the policy can pay in total or per claim, not the order of payment: Limit of Liability is the maximum the policy will pay, Aggregate is the total it will pay in a policy period, and Per Person is the limit for each individual in a bodily injury claim.

When there are multiple layers of liability coverage, the primary policy pays first and only after its limit is reached does the excess policy come into play. This layering means the primary insurer covers losses up to its limit, and any amount beyond that is picked up by the excess coverage (assuming its limits aren’t exhausted). For example, if a claim totals 250,000 and the primary limit is 100,000, the primary pays 100,000 and the excess would cover the remaining 150,000, up to its own limit. The other terms describe how much the policy can pay in total or per claim, not the order of payment: Limit of Liability is the maximum the policy will pay, Aggregate is the total it will pay in a policy period, and Per Person is the limit for each individual in a bodily injury claim.