What does 'excess liability' coverage provide?

Excess liability coverage is designed to provide additional financial protection beyond the limits of a primary liability policy. This type of coverage kicks in when the liability limits of the primary insurance are exhausted due to a claim. For example, if a business has a primary liability insurance policy with a limit of $1 million and faces a claim that results in a judgement of $1.5 million, the excess liability coverage would cover the additional $500,000.

This type of insurance is particularly important for individuals or businesses that may face substantial liabilities and want to safeguard against large claims that could exceed their primary policy limits. It ensures that there is a safety net in place for unforeseen, higher-than-expected costs.

The other options do not accurately describe what excess liability coverage entails. It does not specifically cover incidents outside of the primary policy, nor does it provide lower rates for liability insurance, nor is it limited to just covering legal defense fees. Instead, excess liability serves as an important layer of protection against significant financial loss.