What does Coordination of Benefits (COB) allow for in insurance claims?

Coordination of Benefits (COB) is a process used in insurance claims that is designed to ensure that when a person is covered by multiple insurance policies, the total amount paid by all insurers does not exceed the actual claim amount. Specifically, the correct answer highlights that, under this arrangement, the secondary payer can limit its payment to the remaining balance after the primary payer has settled the claim. This mechanism is crucial because it ensures that there is no overpayment when multiple insurance policies are involved.

For example, if a person has two health insurance plans, one may be deemed primary and the other secondary. When a claim is submitted, the primary insurer pays its share first, and the secondary insurer then only pays the remaining amount, up to the total claim limit. This approach prevents the situation where a claimant could potentially receive more than their eligible expenses, fostering fairness and preventing excessive payouts for claims.

This framework establishes a controlled environment for insurance payouts, which is essential for maintaining the integrity of the insurance system and ensuring that no single party bears more expense than agreed upon.