What is the primary function of an excess liability policy?

The primary function of an excess liability policy is to cover additional liability above a primary insurance policy. This means that once the limits of the underlying primary insurance are exhausted, the excess liability policy kicks in to provide further coverage. This type of policy is crucial for individuals or businesses that may face large liability claims, as it helps ensure that they are adequately protected against the financial ramifications of those claims.

Excess liability policies do not replace damaged property, as they are not designed to provide property coverage at all. They are also not intended to cover all types of loss since their scope is specifically related to liability. Lastly, while they can be beneficial for high-risk individuals, the primary focus of an excess liability policy is not to offer lower premiums but rather to provide an additional layer of financial security in the face of high liability exposure.