What does first dollar coverage mean in insurance policies?

First dollar coverage in insurance policies refers to the scenario where the insurance begins to pay for covered expenses as soon as they are incurred, without requiring the insured to pay a deductible beforehand. This type of coverage is particularly appealing because it alleviates the financial burden on the insured at the time of a claim, allowing for immediate support for covered expenses.

For example, if an individual has a first dollar coverage health insurance policy and incurs a medical expense, the policy would immediately cover the cost up to the limits specified, rather than waiting for the insured to meet a specific deductible or out-of-pocket maximum. This feature can be especially valuable in situations where healthcare costs are unpredictable and can vary significantly, providing better financial protection from the outset.

In contrast to this, other options describe different types of coverage or limitations that do not align with the concept of first dollar coverage.