What is excess insurance?

Excess insurance refers to a type of coverage that is activated when the limits of primary insurance are exhausted. It provides additional protection beyond the limits set by the primary policy. For example, if a primary insurance policy has a limit of $1 million and a covered loss occurs that costs $1.5 million to settle, the excess insurance would kick in to cover the additional $500,000 once the primary policy's coverage limit has been reached.

This option is vital for individuals or businesses that need higher levels of coverage than what standard policies provide, offering peace of mind against significant losses. Other options do not appropriately define the unique function of excess insurance: while coverage for additional properties or high-value items may refer to specific types of insurance, they do not encompass the concept of excess insurance. The mention of insurance that applies only to business losses is also too narrow and does not capture the broader application of excess insurance in personal or commercial contexts.