What is the function of a coordination-of-benefits clause?

The function of a coordination-of-benefits clause is primarily to specify the primary and excess insurance coverage when an individual is covered by multiple insurance policies. This clause helps clarify which insurance policy will pay first (the primary coverage) and which policy will supplement the payments (the excess coverage).

When individuals have more than one insurance plan that could cover a claim, coordinating benefits becomes necessary to avoid duplication of payments and ensure that the total payout does not exceed the actual costs incurred. This clause effectively manages the interaction between different insurances, providing a clear framework for which insurer is responsible for which portion of a claim.

The other options do not accurately describe the primary role of the coordination-of-benefits clause. For example, determining premium amounts is more related to underwriting factors rather than claim payouts, while limiting total payouts is typically handled through policy limits rather than coordination of benefits. Integrating different types of insurance under one policy is a different concept altogether and does not fall within the function of a coordination-of-benefits clause.