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Understanding primary and excess auto insurance coverage

On Behalf of | Feb 1, 2024 | Insurance Law |

Most of the time, we don’t give our car insurance a lot of thought. As long as we pay our premiums, we expect our insurer to cover us if we get in an accident. But after an accident, we are forced to deal with the intricacies of insurance policies and the law.

In some instances, there is an issue over primary and excess coverage. This is an area of insurance that many are unfamiliar with, but understanding it is important when seeking to get reimbursed.

Facts about primary and excess coverage

When there are at least two policies in effect for a motor vehicle and there is an accident in which a claim is necessary, the claim being made on the primary or excess coverage will depend on the circumstances.

First, if a person was operating the vehicle as part of their job, it will be covered under business’s primary insurance. For example, if it is being road tested, parked, stored, serviced, repaired or sold and an accident happens, the business will have insurance to account for it. The primary insurance policy will be used to pay for the damage or replacement. A separate policy is excess coverage.

If the person was operating the vehicle for reasons that were not business-related or there was another person operating the vehicle, the policy held by the person operating it will be primary and the other policy excess coverage. That means if the person, for whatever reason, took the vehicle to run an errand unrelated to the business, they are responsible for it.

At many dealerships, a courtesy vehicle is provided to a driver who has left their own vehicle for service. If the owner is loaned a different vehicle while they do not have their own, the customer’s policy will be primary and other policies are excess coverage. The customer must be informed of this at the time the vehicle is loaned to them.

Addressing insurance related disputes can be difficult

Although this might not sound as if it is a major issue, disagreements as to whose insurance is the primary or excess coverage can arise. This can occur if a person is worried about their insurance rates rising or other problems coming up because of the claim. If there are disputes about this or any other area of insurance law, it is useful to be aware of this and be prepared to ensure the correct policy is used.

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