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🔗 '''Secondary insurance''' is a [[Definition:Insurance policy | policy]] that responds to a [[Definition:Claims | claim]] only after a [[Definition:Primary insurance | primary insurance]] policy has paid its share of the loss. Within the insurance industry, the primary-versus-secondary distinction governs the order in which multiple [[Definition:Coverage | coverages]] apply to the same [[Definition:Loss event | loss]], a concept known as [[Definition:Other insurance clause | other insurance]] coordination. The secondary policy picks up costs that exceed the [[Definition:Policy limit | primary policy's limits]] or that fall outside its specific terms, acting as a financial backstop rather than the first line of defense.

⚙️ When a [[Definition:Policyholder | policyholder]] carries overlapping coverage — for example, group [[Definition:Health insurance | health insurance]] through an employer and an individual plan, or a personal [[Definition:Auto insurance | auto policy]] alongside a commercial fleet policy — each contract contains an [[Definition:Other insurance clause | other insurance clause]] that dictates its priority. The primary [[Definition:Insurer | insurer]] processes the claim first, applying its own [[Definition:Deductible | deductibles]], [[Definition:Copayment | copays]], and [[Definition:Policy limit | limits]]. Once that payment is determined, the secondary insurer evaluates the remaining balance against its own terms. In [[Definition:Health insurance | health insurance]], this process is formalized through [[Definition:Coordination of benefits (COB) | coordination of benefits]] rules, which prevent the combined payments from exceeding the actual charges. In [[Definition:Liability insurance | liability]] and [[Definition:Property insurance | property]] lines, [[Definition:Excess insurance | excess]] and secondary positions are spelled out in the policy language or negotiated at placement.

💡 Understanding secondary status is essential for [[Definition:Claims adjuster | claims adjusters]], [[Definition:Insurance broker | brokers]], and policyholders alike, because misjudging the payment order can delay settlements and create disputes between carriers. For [[Definition:Underwriter | underwriters]], knowing that a policy will sit in a secondary position affects pricing — secondary exposure typically carries lower expected [[Definition:Loss frequency | frequency]] of payout, though individual claims that do reach the secondary layer can be large. In the [[Definition:Commercial insurance | commercial]] space, layered insurance programs deliberately stack primary and secondary (or [[Definition:Excess insurance | excess]]) policies to build towers of coverage for high-value risks, with each participating [[Definition:Insurer | insurer]] carefully defining the attachment point at which its obligation begins.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Primary insurance]]
* [[Definition:Excess insurance]]
* [[Definition:Other insurance clause]]
* [[Definition:Coordination of benefits (COB)]]
* [[Definition:Umbrella insurance]]
* [[Definition:Policy limit]]
{{Div col end}}

Definition:Secondary insurance - Revision history

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