What does “excess coverage” refer to in surplus lines?

“Excess coverage” in the context of surplus lines refers to additional insurance that provides higher limits than what is offered by the primary policy. This type of coverage is designed to kick in after the limits of the underlying primary policy have been exhausted.

Surplus lines are often used when a standard insurance market cannot accommodate specific risks, and excess coverage specifically addresses situations where additional protection is necessary beyond the foundational coverage. Essentially, if a primary insurance policy covers a maximum of a certain amount, excess coverage will provide funds for losses that exceed that limit, ensuring that the insured has additional financial protection.

This concept is crucial for individuals and businesses that face significant risks and liabilities, as it allows them to secure a level of coverage that adequately protects their assets or operations, particularly in high-risk industries or unique circumstances that do not fit traditional underwriting guidelines.