What is Primary Insurance?

May 11, 2012

Primary vs. Excess insurance, what's the difference?

As a small business owner you may have an obligation to obtain insurance when bidding on a prospective client. These insurance requirements may also state that your insurance must be primary. What does this mean? A primary policy is the first policy to respond to a loss or claim. An excess policy is the second policy that responds to the same claim or loss and essentially sits “on top” of the primary policy. Umbrella Insurance is a common type of an excess policy. An Umbrella Policy is considered secondary coverage, meaning that any claim must exceed your primary policy’s limits of liability before the Umbrella coverage kicks in.

Small business liability insurance from Hiscox

Hiscox professional liability insurance
At Hiscox our professional liability insurance is primary, unless other valid and collectible insurance exists, in which case Hiscox will look to be excess over that other insurance. In the event no other collectible insurance exists, your Hiscox policy will remain as the primary policy. Hiscox’s professional liability insurance does make an exception that if a second policy by its terms explicitly deems itself to be excess over our professional liability policy, we won’t consider that other collectible insurance, and Hiscox will stay in the primary position.

Hiscox general liability insurance
Our general liability insurance policy also states that the policy is primary, unless another policy was obtained with the purpose of covering a specific risk that the general liability would otherwise cover. For example, a premises rented to you may have fire insurance that, if purchased, would be considered the primary policy. Under our general liability insurance, the limit for damages to premises rented to you would provide excess coverage over the existing fire insurance policy.

Hiscox business owners insurance
The general liability section of our business owners policy (also know as BOP insurance) works the same way as does our stand-alone general liability insurance. The property section is similar in that your BOP coverage will slide to an excess position if there is another small business insurance that covers the same loss or damage.

Whether or not you are a Hiscox customer, we hope this helps to clarify a common question about primary/excess insurance coverage and how it works to protect your business. If you are in need of small business insurance please do not hesitate to contact us.