What is an “excess liability” policy?

An excess liability policy is designed to provide additional coverage beyond the limits offered by a primary insurance policy. This type of policy steps in when the limits of the primary coverage are exhausted, offering an extra layer of financial protection. For example, if a business has a general liability policy with a limit of $1 million and faces a claim that costs $1.5 million, an excess liability policy could cover the additional $500,000.

This policy is particularly valuable for businesses and individuals who face significant liability risks, ensuring they have enough coverage to protect their assets in the event of a large claim. The excess liability policy enhances overall coverage without the need to purchase a completely new policy or higher limits on the primary policy.

The other options refer to specific types of coverage rather than the broader function of an excess liability policy. For instance, a policy covering just one type of risk focuses on specific exposures, liability coverage for business vehicles pertains to operational vehicles, and insurance for business premises is tailored to property risks related to the physical locations of businesses. Each of these serves distinct purposes but does not provide the additional protection that an excess liability policy offers beyond primary coverage limits.