What is the role of primary insurance?

The primary role of primary insurance is to provide immediate coverage for losses when they occur. It is designed to pay for claims as they arise, ensuring that the insured party can receive prompt financial assistance to address their losses. This type of insurance is the first layer of protection and is crucial for individuals and businesses to mitigate risks associated with potential liabilities, property damage, or accidents.

In contrast, other options suggest roles more aligned with secondary or excess insurance policies. For example, the option suggesting that primary insurance pays only after other policies have exhausted their limits describes the function of excess insurance, which acts as a secondary layer and does not apply until certain thresholds set by primary coverage are met. Similarly, the suggestion that primary insurance does not cover property damage does not align with its typical function, as many primary insurance policies are specifically designed to include property coverage. Finally, the assertion about providing backup for excess coverage again relates to a support role beyond the immediate needs that primary insurance is meant to address. Hence, the option claiming that primary insurance covers losses immediately reflects its core purpose effectively.