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📋 '''Excess policy''' is an [[Definition:Insurance policy | insurance policy]] that provides [[Definition:Coverage | coverage]] only after the limits of an underlying or [[Definition:Primary insurance | primary policy]] have been exhausted. Unlike an [[Definition:Umbrella insurance | umbrella policy]], which may broaden coverage beyond the primary terms, a pure excess policy typically follows the same terms and conditions as the layer beneath it — a principle often referred to as "following form." These policies are a staple of [[Definition:Commercial insurance | commercial insurance]] programs where single-policy limits are insufficient to cover the insured's total exposure.

⚙️ Structurally, an excess policy sits in a coverage tower above the primary layer, activated only when a [[Definition:Claim | claim]] penetrates through the [[Definition:Attachment point | attachment point]]. The [[Definition:Insured | insured]] or its [[Definition:Broker | broker]] assembles the tower by placing successive layers with different [[Definition:Insurance carrier | carriers]], each with its own excess limit and [[Definition:Premium | premium]]. Because each ascending layer faces a lower probability of being triggered, carriers pricing higher excess layers generally charge less per dollar of coverage. The policy typically references the underlying coverage explicitly and may include a [[Definition:Drop-down provision | drop-down provision]] if the primary insurer becomes insolvent or refuses to pay.

💡 For organizations with significant liability exposures — large manufacturers, healthcare systems, financial institutions — excess policies are not optional; they are a core component of a defensible [[Definition:Risk management | risk management]] strategy. A well-structured tower ensures that a catastrophic [[Definition:Loss | loss]] does not consume assets beyond what insurance can absorb. [[Definition:Risk manager | Risk managers]] routinely evaluate whether the total tower limit remains adequate as the organization grows or as the legal landscape shifts, particularly in [[Definition:Liability insurance | liability]] classes where [[Definition:Social inflation | social inflation]] and rising verdict sizes have pushed losses into layers once considered remote.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Umbrella insurance]]
* [[Definition:Primary insurance]]
* [[Definition:Attachment point]]
* [[Definition:Excess limit]]
* [[Definition:Following form]]
* [[Definition:Layered insurance program]]
{{Div col end}}

Definition:Excess policy - Revision history

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