Excess coverage applies to a loss only after which type of coverage?

Excess coverage is designed to kick in only after primary coverage has been exhausted. This means that if a policyholder experiences a loss, they first must file a claim with their primary insurance. The primary coverage is the first layer of protection and will handle the initial amount of the claim up to its limits. Only after those limits are reached does the excess coverage apply to cover any additional amounts owed.

In terms of insurance policies, it’s crucial to establish what the primary coverage entails—usually the one that provides the fundamental level of protection for a risk. Once the primary insurance has paid its portion, and if the loss amount exceeds that limit, the excess coverage comes into play, providing additional funds as specified in the terms of that policy.

Choosing any other type of coverage, like secondary, temporary, or supplemental, does not correctly identify the relationship between excess coverage and how it functions in conjunction with primary coverage. These alternatives refer to different layers or types of insurance but do not define the specific hierarchy of claims settlement that excess coverage follows.