What is the primary purpose of the Coordination of Benefits Provision?

The primary purpose of the Coordination of Benefits Provision is to provide insureds with as much coverage as possible while simultaneously addressing the issue of overinsurance. This provision is vital in scenarios where an individual has multiple insurance policies that could potentially cover the same healthcare expenses. By coordinating the benefits, insurers ensure that the total amount paid from all policies does not exceed the actual incurred expenses.

This approach protects both the insurer and the insured. For the insurer, it helps mitigate the risk of overpayment and ensures that benefits are fairly distributed between multiple insurers. For the insured, it ensures that they maximize their available coverage without risking financial loss due to excessive payouts from multiple policies.

The other options do not capture the essence of the Coordination of Benefits Provision as effectively. While preventing overinsurance is a component of the coordination, it is more about ensuring the insured receives the maximum allowable benefits while avoiding duplicate coverage. The provision does not primarily serve to encourage the purchase of additional coverage or give insurers discretionary power over claims payment; these aspects are beyond its central purpose.