What is meant by the primary layer of insurance?

The primary layer of insurance refers specifically to the initial level of coverage that is activated when a loss occurs, typically following any applicable deductible. This layer is responsible for covering losses up to a certain limit, and when the loss amount exceeds this limit, other layers or types of insurance coverage may come into play, such as excess or umbrella insurance.

In insurance structures, the primary coverage is crucial because it serves as the first line of defense against a claim. It represents the portion of the risk that the insured is most likely to access, as it covers the foundational levels of loss before any additional layers are considered. Understanding this concept is important in risk management and ensures that individuals and businesses are adequately protected against potential liabilities.