What is the basic criteria of insurance being primary in case two or more policies?

In the event that two or more insurance policies provide coverage for the same loss, there are established criteria to determine which policy is considered primary and, therefore, responsible for paying the claim first. Here are the key criteria used to determine priority among insurance policies:

1. Other Insurance Clause:

- Many insurance policies contain an "other insurance" clause that outlines how coverage interacts with other policies. These clauses often specify whether the policy is primary or excess (secondary).

2. Specific Policy Wording:

- Insurance policies may include specific language that assigns priority to a particular policy or type of coverage. The wordings of each policy need to be carefully reviewed to identify any such provisions.

3. Relevant Statutes and Regulations:

- Some jurisdictions have specific laws and regulations that dictate the order of priority among insurance policies. These statutory provisions may override any conflicting policy language.

4. Type of Insurance Coverage:

- There may be a hierarchy based on the types of insurance involved. For example, auto insurance might be primary before property insurance in scenarios involving vehicle-related accidents.

5. Insurable Interest:

- If multiple policies exist in the name of different insured parties, priority may be given to the policy that covers the party with the primary insurable interest (e.g., the owner versus a borrower).

6. Timeliness of Notice:

- Some insurance policies specify that coverage is subject to prompt notification of a loss. Providing timely notice as per policy requirements can impact priority.

7. Date of Policy Inception:

- In certain instances, the policy with an earlier inception date may be considered primary unless there are other factors affecting priority.

8. Contribution Clauses:

- Some policies include "contribution" or "pro rata" clauses that require multiple insurers to share the claim payment proportionately based on their respective policy limits.

It's crucial to note that insurance priority rules can vary depending on the jurisdiction, specific insurance contracts, and other relevant factors. Therefore, careful analysis and adherence to the provisions of each policy, along with consulting experienced insurance professionals, are highly recommended when dealing with complex insurance coverage scenarios.