What is the main purpose of the Coordination of Benefits (COB) provision in insurance?

The primary purpose of the Coordination of Benefits (COB) provision is to prevent excessive payouts from multiple health plans. This is crucial in situations where an individual is covered by more than one health insurance policy. Without COB, an insured person could potentially submit claims to multiple insurers for the same medical expenses, leading to overpayment for services rendered. The COB provision establishes a framework to determine which insurance policy is the primary payer and which one is secondary. This ensures that the combined benefits do not exceed the actual medical costs incurred, fostering a balanced and fair approach to handling claims and benefits without overwhelming the insurance system.

By design, the COB helps insurance companies manage their risk and ensures that policyholders are not taking advantage of their multiple coverages. This mechanism is important not only for insurance companies but also for maintaining healthcare costs and provider reimbursements within a sustainable range.