Excess Insurance

What Does Excess Insurance Mean?

Excess insurance is coverage that activates once a specific loss amount is reached. At that point, the insurer covers losses beyond that threshold, up to the policy limit. Policyholders with a primary insurance policy often purchase excess insurance as an additional layer of protection.

Insuranceopedia Explains Excess Insurance

Excess insurance does not alter or expand the specific covered perils; rather, it increases the available funds to cover the same perils addressed by the primary insurance policy. In other words, it supplements the primary insurance. For example, if a person has a primary insurance policy covering $100,000 in losses and an excess policy covering an additional $50,000, both policies would contribute if a covered loss exceeds the primary policy’s limit. Thus, if the policyholder incurs $125,000 in losses, the excess policy would cover the remaining $25,000 after the primary coverage is exhausted.