What is the difference between primary and excess property insurance?

The distinction between primary and excess property insurance is vital for understanding how claims are handled in insurance policies. Primary insurance is the initial layer of coverage that responds first when a claim is made. It is the first point of contact for claims and pays out up to its limit for covered losses.

Excess insurance, on the other hand, serves as additional coverage that kicks in only after the limits of the primary policy have been exhausted. This means that if a claim exceeds the coverage limit of the primary insurance, the excess insurance will provide further financial support, effectively helping cover larger claims that go beyond the primary coverage limits.

For those looking to manage risk effectively, the knowledge of how primary and excess insurance interact is important, as it allows policyholders to secure adequate coverage for potential losses without gaps in coverage. Understanding this structure helps in making informed decisions about insurance needs and ensures that individuals or businesses are protected in various scenarios.