What Does Excess Insurance Mean?
Excess insurance is insurance coverage that kicks in when a particular loss reaches a certain amount. At that point, insurer will cover losses in excess of that sum up to the policy limit. Therefore, policyholders with a primary insurance policy often purchase excess insurance as an additional layer of protection.
Insuranceopedia Explains Excess Insurance
Excess insurance does not increase or change the specific, covered perils. Instead, it increases the amount of money available to protect against the same perils covered by a primary insurance policy. In other words, it serves as a supplement to primary insurance policies.
So, if a person has a primary insurance policy that covers $100,000 worth of losses and an excess policy that covers $50,000 worth of losses, after a covered loss exceeds the primary policy's coverage, both policies would help pay for the damages if the policyholder sustained $125,000 worth of losses.