Washington State Insurance Practice Exam

In insurance terms, the concepts of primary and excess refer to the order in which multiple insurance policies pay out in the event of a covered loss. The correct answer, "One insurance policy pays first, up to its limits in a covered loss, followed by a secondary policy," accurately describes this relationship. The primary policy will pay out first, up to its coverage limits, and only after its limits are exhausted will the excess or secondary policy start to provide coverage. The other options are incorrect: A. This choice does not accurately define primary and excess in insurance terms. Primary and excess relate to the order of which policies pay, not specific out-of-pocket expenses. B. This choice refers to other valid insurance policies covering the same risk but does not explain the primary and excess relationship. C. This choice mentions a time period during which the policy provides coverage, which is not directly related to the primary and excess concepts in insurance.