What does excess insurance provide?

Excess insurance serves as a supplementary layer of coverage that kicks in when the limits of a primary insurance policy have been exhausted. This type of insurance is designed to provide additional limits above the standard policy limits, ensuring that in the event of a significant claim, the insured party has extra financial protection. For instance, if a primary policy covers up to $1 million and damages exceed that, the excess insurance would cover the additional amounts beyond that limit. This ensures comprehensive protection against potential financial losses that could arise from unforeseen large claims.

The other options do not accurately describe the nature of excess insurance. Basic coverage only refers to the foundational protection offered in a standard policy, while a fixed amount of coverage would apply more to specific types of policies that do not vary with the level of loss. Insurance for high-value items specifically targets valuable assets but does not encompass the broader concept of providing additional limits, which is at the heart of excess insurance.