In insurance terminology, what does "excess insurance" specifically address?

Excess insurance refers to a type of insurance coverage that provides additional limits beyond the primary insurance policy. This means that if a claim exceeds the limits set by a primary policy, the excess insurance can help cover the remaining amount. This specific type of insurance is crucial for individuals or businesses that face higher risks or potential liabilities, as it offers a safety net for substantial claims that may arise.

The focus on claims that exceed policy limits underscores the purpose of excess insurance, which is to protect policyholders against large losses that are not fully compensated by their standard insurance policy. This additional layer of coverage ensures that in the case of severe incidents leading to significant financial repercussions, the insured will have access to funds necessary to cover those costs beyond the basic policy limits.