What is an 'Excess Coverage' in insurance?

Excess coverage refers to additional insurance that provides protection after the limits of a primary policy have been exhausted. It functions as a safety net, ensuring that once the coverage limits of the main policy are reached, the excess coverage will come into play to provide further financial protection against losses. This type of insurance is particularly useful for individuals or businesses with high-value assets or significant liabilities, as it helps ensure comprehensive protection beyond standard policy limits.

This is distinct from the other types of coverage mentioned. For instance, some options suggest that certain coverage applies only to specific events, such as natural disasters, or that it pays out before other policies. However, excess coverage is specifically designed to provide a backup that activates only after the primary coverage has been fully utilized. As for endorsements, they typically modify or enhance the existing policy terms rather than serve as a layer of coverage once limits are met. This clarifies why the definition posited as the correct answer accurately describes the function and purpose of excess coverage in insurance.