Which provision helps determine the proportion of a claim paid when multiple insurance policies cover the insured?

• A. Coinsurance
• B. Exclusions
• C. Endorsements
• D. Coordination of benefits

Answer: (D)

Coordination of benefits governs how a claim is paid when multiple policies cover the insured. It establishes the order of payment (which policy pays first and how much) and the portion each policy will contribute toward eligible expenses. This prevents duplicate payments and ensures the total benefits don’t exceed the actual costs. In practice, the primary plan pays up to its limits, and the secondary plan covers remaining eligible expenses up to its own limits. This concept keeps multiple coverages from overpaying the insured and ensures fair distribution of the claim. Coinsurance relates to the insured’s share of costs within a single policy, exclusions are items not covered, and endorsements are changes to the policy.