First Dollar Coverage

What is 'First Dollar Coverage'

First dollar coverage is an insurance policy feature that provides full coverage for the entire value of a loss without a deductible. Typically, first dollar coverage exists all the way up to the full amount of the policy.

Typically, the "full amount" is considerably low, which makes these types of policies uncommon. 

BREAKING DOWN 'First Dollar Coverage'

First dollar coverage can be found on health insurance policies, homeowners' insurance and car insurance, among others. This type of insurance involves higher premiums because the insurer is bearing greater risk for the insured item. Many of these plans for health insurance will have low limits meaning there is a cap on the total amount the insurance company will cover.

For example, under a first dollar coverage plan, the insurance company will begin to pay its share of expenses from the first paid service the patient receives. 

Critics of first dollar coverage argue it places unnecessary strains on the health system and drives up prices because those with first dollar coverage overuse health services. However, on the other hand, the argument is made that patients without first dollar coverage often put off visits because they have to pay out of pocket costs and this can lead to more serious diagnoses that require longer and more expensive procedures. 

First dollar coverage tends to be less prevalent in the home and car insurance industry because of hefty premiums.