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Information on Secondary Insurance

Secondary insurance occurs when there are two or more insurance policies, especially health insurance, covering a single individual. Individuals usually only need one type of insurance and don't even consider buying a second policy. Sometimes family circumstances, however, lead to a need for secondary insurance: In these cases, individuals need to decide if they want to keep the secondary insurance or rearrange insurance policies so that only one policy is in effect.

  1. Definition

    • Secondary insurance is an insurance policy that covers a person who already has another insurance policy. The person typically buys the primary policy himself or is given the policy as a benefit from the company that he works for. This primary insurance applies to the person directly. Secondary insurance is given to another person but includes benefits that apply to other people --- generally relatives. A person with secondary insurance has a primary policy and is covered by another's policy as well.

    Occurrence

    • Secondary insurance is common among families. One spouse may have a primary policy but be covered as a family member under the plan the other spouse has. Children may be covered under both policies. Which policy acts as the primary version depends on the date of the policy's creation: The longest-held policy covering the individual often acts as the primary version.

    Redundancy

    • Insurance companies are well aware of the problems associated with secondary insurance --- and they don't want to pay out twice for the same procedure and cover all the costs associated with medical care. For this reason, insurance companies create redundancy clauses in their policies. These clauses make sure that only one type of insurance is used to cover medical treatment --- not both policies together.

    Process

    • If redundancy clauses don't bar the possibility, policyholders can use secondary insurance to their advantage. While they can't use both policies at the same time, if the medical costs exceed the total payments from one policy, they can use the secondary policy to pick up the remainder of the costs, although not the deductible.

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