Coordination Of Benefits
What Does Coordination Of Benefits Mean?
Coordination of Benefits (COB) refers to the rules that determine the primary and secondary plans when an individual is covered by two or more insurance policies for the same risks. It ensures that insurers do not overpay on claims.
Insuranceopedia Explains Coordination Of Benefits
Coordination of Benefits (COB) ensures that a person with two or more insurance policies covering the same risks does not use these benefits to gain a profit. Insurance coverage is intended to compensate for a loss, but if an insured individual were to receive the same medical procedure paid for twice or be fully compensated for an auto accident by two insurers, the amount received would exceed the actual remedy. Essentially, one insurance company would cover the loss, while the other would unintentionally provide the insured with a profit.
One of the key COB rules is that if a person is covered as a policyholder for a specific risk and is also covered for the same risk as a dependent under another person’s insurance policy, the first policy is considered the primary plan. The second policy will only pay for what the first cannot cover.
