What is excess insurance?

Excess insurance is designed to provide additional coverage beyond the limits of a primary insurance policy. Once the primary insurance has exhausted its limits due to a claim, the excess insurance kicks in to cover the remaining costs. This type of coverage is particularly useful for individuals or businesses seeking to protect themselves against significant financial losses that could exceed the limits of their standard policies.

In contrast, other types of coverage described do not capture the essence of excess insurance. For instance, coverage that begins after a primary insurance's limits are reached accurately defines the purpose of excess insurance. However, insurance that covers life and health risks or specifically pertains to high-value property does not characterize the function of excess insurance but rather relates to different lines of coverage. Similarly, a type of insurance that has no limits suggests a different approach to risk management, which does not align with the structured nature of excess insurance policies that do come with specific limits even as they provide additional coverage.