What is an excess policy designed to do?

An excess policy is designed to pay for losses after the limits of the primary insurance policy have been exhausted. This means that once the primary policy has paid up to its limit for a covered loss, the excess policy will kick in and provide additional coverage. It acts as a supplementary layer of protection, ensuring that insured parties have access to higher limits of coverage when needed, allowing them to manage larger claims effectively.

This structure is particularly useful in various scenarios, such as in liability or property coverage, where the risk might exceed the limits of the primary policy. An excess policy does not alter the terms or conditions outlined in the primary policy; rather, it simply provides an additional layer of coverage above what the primary insurance offers. Thus, the primary policy must still be active and applicable for the excess coverage to be triggered.