You may have seen the terms ‘primary’ and ‘secondary’ policy tossed around if you’ve been looking at insurance policy documents – including travel medical insurance – and you may have wondered, “What’s the difference?”
A primary policy is the one that pays first in the event that a loss is covered by more than one policy. A secondary policy pays second. In simple terms, if you hold more than one policy that covers the same loss, the primary policy pays first and the secondary policy coverage begins where the primary coverage ends. An ‘umbrella insurance’ insurance policy is a good example of a secondary policy.
International travel insurance policies are usually secondary policies, but some are defined as primary. Read the plan carefully to know whether you have a primary or secondary travel insurance plan.
How Primary and Secondary Insurance Works
The reason behind primary and secondary policies is to protect the insurance company from overlapping coverage. It’s also to make sure that the policyholder does not collect more than once for the same loss.
Here’s how it works: If you have a health insurance plan that covers your medical care within your home country (up to a certain policy maximum limit after a deductible), that is your primary insurance plan. It covers your regular health care needs as long as you pay the premiums and deductibles. In nearly all cases, however, your regular health insurance plan will not cover your medical care outside your home country – and this is where a secondary insurance plan is necessary.
Secondary insurance benefits becomes effective after your primary insurance benefits are exhausted or automatically when your primary insurance is not in effect. Specifically, when you leave your home country and are outside the coverage area of your primary insurance plan, your secondary plan automatically becomes your primary insurance coverage and pays your covered medical bills up to the plan limit.
How to Determine Whether Primary or Secondary Insurance Plan is in Effect
When you need to make a claim, you’ll have to do a little research. Review the summary of benefits under your insurance plan document or make a call to the insurance company for any assistance or clarification.
For example: If your primary health insurance plan covers your business trip to Mexico, and you become very ill and have to be hospitalized, you may be paying a high out-of-network deductible and co-insurance costs. This is where your travel health insurance plan – as secondary coverage – becomes necessary. Even if your primary health insurance covers some of your medical costs, your travel health insurance will cover the rest up to the plan limits.
Why You Need Secondary Insurance – Especially When Traveling Abroad
A primary travel insurance policy is responsible for paying benefits first as long as the traveler’s primary policy is in effect when and where the claim was made. Secondary insurance benefits start paying once your primary benefits are exhausted or when your primary insurance is not in effect. When you leave your home country, you are traveling outside the coverage area of most health insurance plans, thus you need travel health insurance. The travel health insurance plan automatically becomes the primary insurance coverage because your primary coverage will not be in effect and the travel insurance will pay your covered medical bills up to the plan limits.