Which coverage is used when the basic liability limits are not sufficient for an insured’s needs?

The correct choice, Excess Liability insurance, serves as a crucial layer of protection when the basic liability limits in a primary insurance policy have been exhausted. This type of coverage is designed to kick in after the limits of the underlying policy have been reached, providing additional financial support for claims that exceed those limits.

For example, if an insured is involved in an accident where damages total $1 million, but their standard liability insurance only covers up to $500,000, Excess Liability insurance would cover the additional $500,000, providing peace of mind and financial security.

While Umbrella Coverage is also a related option that offers additional liability protection, it can extend beyond the coverage limits of both primary policies and underlying Excess Liability policies, providing broader protection for more extensive risks. However, the specific focus of the question relates directly to the use of Excess Liability when base limits are inadequate.

Commercial Property Insurance addresses property damage rather than liability issues, so it does not apply in this context. Personal Liability Coverage is often included in homeowners or personal insurance policies, but it typically operates within a set limit, making it less applicable when specifically discussing the inadequacy of basic liability limits. Thus, Excess Liability is the most accurate choice for extending liability coverage when necessary.