What is first-dollar coverage in an insurance policy?

First-dollar coverage in an insurance policy means that the coverage begins to pay out from the very first dollar of a covered loss without requiring the policyholder to meet a deductible first. This type of coverage is beneficial because it allows for immediate financial protection without the policyholder having to incur any out-of-pocket costs before receiving benefits. It appeals to many because it provides simplicity and ease of access to benefits for each claim.

The other options describe different aspects of insurance coverage. For example, having a deductible means coverage only kicks in after a specific amount has been paid by the insured. Annual renewal fees pertain to the administrative aspect of maintaining a policy rather than the policy's coverage characteristics. Lastly, partial coverage without a deductible could imply that there are limits to the extent that the insurance will cover the claimed loss, which is not applicable with first-dollar coverage.