What is meant by "excess insurance"?

Excess insurance refers to a type of coverage that provides additional protection beyond the limits set by a primary insurance policy. This kind of insurance is particularly important when an individual wants to ensure they have sufficient coverage in the event of a claim that exceeds their standard policy limits. For instance, if a person has an auto insurance policy with a limit of $100,000 for liability but is involved in an accident where damages exceed that amount, excess insurance would cover the additional costs beyond the initial limit provided by the primary policy.

This coverage is crucial for individuals who want to mitigate the risk of substantial financial loss due to liabilities that surpass their existing limits. Excess insurance typically comes into play after the primary insurance policy has been exhausted, providing a safety net for the policyholder in catastrophic situations.

In the context provided, the other options do not correctly align with the definition of excess insurance, as they address different aspects of insurance coverage rather than specifically relating to the additional coverage aspect highlighted here.