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🔺 '''Excess insurance''' is a type of [[Definition:Coverage | coverage]] that sits above a [[Definition:Primary insurance | primary insurance]] layer, responding only after the underlying policy's [[Definition:Policy limit | limit]] has been exhausted by a covered loss. In the insurance market, it serves as a crucial mechanism for extending protection beyond what a single [[Definition:Insurance carrier | carrier]] is willing or able to provide on its own, especially in [[Definition:Commercial insurance | commercial]] and [[Definition:Specialty insurance | specialty]] lines where potential liabilities can be enormous. Unlike [[Definition:Reinsurance | reinsurance]] — which is a contract between insurers — excess insurance is purchased directly by the [[Definition:Policyholder | policyholder]] and forms part of the insured's own tower of protection.

📐 A typical structure works in layers. An insured might carry a primary [[Definition:General liability insurance | general liability]] policy with a $1 million limit, then stack one or more excess policies above it — perhaps $5 million excess of $1 million, followed by another $10 million excess of $6 million. Each excess [[Definition:Insurer | insurer]] agrees to pay only once losses breach the attachment point of its layer. The excess policy generally "follows form," meaning it adopts the same terms, conditions, and [[Definition:Exclusion | exclusions]] as the underlying policy unless the excess contract explicitly states otherwise. [[Definition:Underwriter | Underwriters]] pricing excess layers analyze the [[Definition:Loss history | loss history]], the adequacy of the primary limit, and the probability that losses will penetrate into higher layers, which is inherently less frequent but can involve very large payouts when it happens.

💼 For businesses facing catastrophic [[Definition:Exposure | exposure]] — think large manufacturers, healthcare systems, or transportation companies — excess insurance is not optional; it is the backbone of a sound [[Definition:Risk management | risk management]] program. [[Definition:Insurance broker | Brokers]] construct layered programs by placing each tier with different carriers, spreading risk across the market and often securing more competitive pricing than a single policy with the same aggregate limit could offer. From an insurer's perspective, writing excess layers can be attractive because the frequency of claims is lower, though severity can be substantial. The interplay between primary and excess coverage is also a frequent source of [[Definition:Coverage dispute | coverage disputes]], making precise policy language and clear attachment points essential.

'''Related concepts'''
{{Div col|colwidth=20em}}
* [[Definition:Umbrella insurance]]
* [[Definition:Primary insurance]]
* [[Definition:Policy limit]]
* [[Definition:Self-insured retention (SIR)]]
* [[Definition:Layered program]]
* [[Definition:Follow-form policy]]
{{Div col end}}

Definition:Excess insurance - Revision history

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