What Is Primary & Non-Contributory Insurance?

by Grace Williams; Updated September 26, 2017

The terms primary and non-contributory most often appear in business contracts that involve liability insurance. Primary insurance appears more than non-contributory, because the latter has no set definition. Primary insurance refers to situations with multiple insurance policies where one will step in before the others.

Primary Insurance Definition

Business contracts tend to involve a buyer or client on one side and a seller or service provider on the other. If the contract requires liability insurance, the terms primary and secondary coverage may appear. A primary policy pays out first in case of an emergency but might not fully cover the cost of the damage. Secondary insurance purchased by the client steps in to pay for the remaining costs.

Non-Contributory Definition

The phrase non-contributory has a less-defined meaning than primary insurance and as such rarely appears in contracts. When used, non-contributory can refer to the primary insurance stepping in and paying up to its contribution limits with any remaining funds coming out of pocket from the insured instead than from the secondary insurance.