Which method ensures the insurer pays first up to policy limits before the secondary covers the excess?

The method that ensures the insurer pays first up to policy limits before the secondary coverage addresses any excess is known as primary payment. This approach designates one policy as the primary insurer responsible for covering the initial amounts of a claim up to its limit. Once the primary insurer has paid its policy limit, any remaining amount of the claim can then be covered by the secondary insurance.

In the context of insurance, primary coverage typically takes precedence when multiple policies may apply to the same loss. This ensures clarity and coordination between different insurance carriers, preventing overlap in coverage and streamlining the claims process for the insured. The concept of primary payment is crucial for providing a clear framework for how claims will be settled in instances where multiple insurance policies are involved, ensuring that the primary insurer fulfills its obligations first.

Other methods listed, such as pro rata and contribution of equal shares, generally involve how multiple insurers share the responsibility for payment rather than establishing a priority in payment. Aggregate limit payment refers to the maximum amount an insurer will pay for all claims during a specified period, rather than defining the sequence of coverage. Therefore, primary payment effectively establishes the order of responsibility, making it the correct answer.