Which of the following is a characteristic of primary insurance?

Which of the following is a characteristic of primary insurance?

• A. It pays after other policies have been exhausted
• B. It provides coverage for specific high-value items
• C. It is the first to respond when a claim is presented
• D. It is typically less expensive than excess insurance

Answer: (C)

Primary insurance is characterized by being the first line of defense in the event of a loss, meaning it is the first to respond when a claim is made. This type of insurance takes immediate responsibility for covering the claim up to the limits of the policy. The nature of primary insurance ensures that it is designed to provide immediate financial protection and support when an insured event occurs, which is essential for both policyholders and insurers in managing risk and claims effectively. While options addressing payment sequences, coverage specifics, or costs of insurance provide interesting contexts, they do not define primary insurance in the same way that its role in responding to claims does. Thus, understanding that primary insurance immediately reacts to claims is key to recognizing its fundamental function in risk management.

Primary insurance is characterized by being the first line of defense in the event of a loss, meaning it is the first to respond when a claim is made. This type of insurance takes immediate responsibility for covering the claim up to the limits of the policy. The nature of primary insurance ensures that it is designed to provide immediate financial protection and support when an insured event occurs, which is essential for both policyholders and insurers in managing risk and claims effectively.

While options addressing payment sequences, coverage specifics, or costs of insurance provide interesting contexts, they do not define primary insurance in the same way that its role in responding to claims does. Thus, understanding that primary insurance immediately reacts to claims is key to recognizing its fundamental function in risk management.