In the event of overlapping coverage, what is the term for the policy that pays first?

In the context of overlapping coverage, the term that applies to the policy that pays first is the primary policy. This designation means that when a claim is made, the primary policy is responsible for covering the costs up to its limits before any other policies come into play.

Understanding this concept is crucial in insurance as it dictates the order of payment among multiple policies. A primary policy will typically be the one that provides coverage for a specific risk or circumstance directly, whereas other policies may provide additional layers of coverage or may only kick in when the primary limits are exhausted.

This distinction is important for both policyholders and insurance producers, as it influences how claims are handled and how insured parties can strategize their insurance needs. The primary policy's role ensures that there is clarity on which policy will respond first in the event of a claim, preventing confusion and potential delays in coverage.