What is 'Concurrent Insurance'

Concurrent insurance is when two or more insurance policies that provide coverage for the same risks over the same period of time. Concurrent insurance is most often used when an insured person or business purchases policies in addition to a primary policy, with the additional policies providing excess coverage.

BREAKING DOWN 'Concurrent Insurance'

Concurrent insurance policies might be a good idea for an individual or business that believes that a particular peril poses a significant risk that cannot be effectively covered by a single policy. Purchasing one or more concurrent policies may be a prudent course of action if the cost is not prohibitive.

Determining which insurance policy pays for a covered loss can be difficult. Insurers will seek to shift claim responsibility to the policies that they did not underwrite, and they may take the issue to court. The courts are then responsible for determining who pays – a process called apportionment. Insurers will examine their own policy language, as well as that of the other policies, in order to make a case that the other policy is more specific to the covered loss.

Insurance policy contracts often include clauses outlining the framework that it uses for apportioning coverage when a risk is also covered by other policies. The three primary categories of apportionment are pro rata, excess, and no-liability. For example, the policy may say that it will only provide coverage in excess of the coverage provided by other policies. If this same claim is used in each policy, the general rule is that the language cancels each other out, and each insurer will be responsible for a proportional amount of coverage, called pro rata.

Due to the complexity of policy language, courts may provide a ranking of the order of policies when it comes to which policy is required to offer coverage and by how much. This order is determined by the language of each of the insurance contracts, but may also use other factors such as the amount of premiums paid.

Claim Tips for Concurrent Insurance

In the complex area of concurrent insurance claims, there are a few principles that are worth keeping in mind:

  • Be honest and conservative in your internal assessments of your potential exposure. It does little good to be overly optimistic in assessing your liability risks.

  • If you deselect a particular primary insurer in a concurrent insurance situation, it's important to preserve your rights by keeping the deselected insurer informed and up to date about litigation developments.

  • Avoid surprises. Subject to appropriate confidentiality protections, invite a deselected insurer to participate in settlement discussions or at least keep the deselected insurer apprised of settlement discussions.

RELATED TERMS
  1. Assigned Risk

    Assigned Risk is when an insurance company is required to provide ...
  2. Against All Risks - AAR

    An against all risks insurance policy provides coverage against ...
  3. Assessable Policy

    Assessable Policy is a type of insurance policy that may require ...
  4. Blanket Additional Insured Endorsement

    A blanket additional insured endorsement automatically provides ...
  5. Adjustable Premium

    An adjustable premium is an insurance premium that can change ...
  6. Additional Insured

    Additional insured is a type of status associated with general ...
Related Articles
  1. Insurance

    Insurance Coverage: A Business Necessity

    Don't go to work without this policy in place - especially if your work is in your home.
  2. Insurance

    How Much Life Insurance Should You Carry?

    Before purchasing life insurance it is important to decide if you really need it, what type of policy is best, and how much coverage you should get.
  3. Insurance

    Homeowner's Insurance Guide: A Beginner's Overview

    Everything new homeowners need to know about homeowner's insurance to protect their residence.
  4. Financial Advisor

    Buying a Life Insurance Policy? Read This First

    Knowing who needs life insurance, how it works and the different types of insurance can help consumers make informed decisions about this product.
  5. Insurance

    12 Insurance Questions for High Net Worth Families

    High net worth families should ask themselves these 12 questions regarding comprehensive insurance.
  6. Insurance

    4 Reasons Why Waiting To Buy Life Insurance Is a Bad Idea

    Understand the benefits of applying for and securing life insurance coverage while you are young and healthy, and learn the cost of waiting to get coverage.
  7. Insurance

    What Is and Isn't Covered by Homeowner's Insurance

    Understanding what your insurance covers can be confusing. Learn what almost all insurance policies have in common so you're prepared if disaster strikes.
  8. Financial Advisor

    Who Should Buy a Guaranteed Issue Life Insurance Policy?

    Guaranteed issue life insurance policies have added costs and reduced benefits that make them suitable for only a limited pool of buyers.
  9. Insurance

    Is Loan Protection Insurance Right For You?

    Loan protection insurance can keep you from defaulting on your loans when you're in financial trouble, but it's not for everyone. Learn more on how it can help you.
  10. Insurance

    5 Insurance Policies Everyone Should Have

    Insurance policies come in a variety of shapes and sizes. The right policies will go a long way toward helping you protect your assets.
RELATED FAQS
  1. Can an Insurance Company Deny Coverage?

    Insurance isn't always as straightforward as other products, and insurers can deny coverage in many different instances. ... Read Answer >>
  2. Why is my insurance premium so high/low?

    Insurance premiums can be affected by many factors including: type and amount of risk size of deductible amount of coverage ... Read Answer >>
Trading Center