Property and Casualty Insurance Practice Exam

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What does the term 'excess insurance' refer to?

Coverage that is primary and pays first
A type of insurance that provides varied benefits
Insurance that comes into play after other policies
Universal coverage for all vehicles owned

The correct answer is: Insurance that comes into play after other policies

The term 'excess insurance' specifically refers to a type of coverage that is activated after other insurance policies have reached their payout limits. This means that if a claim exceeds the limits of the primary insurance, the excess insurance will step in to cover the additional costs. It is particularly useful in situations where high-value assets are involved or when a policyholder wants an extra layer of financial protection. This coverage enhances the overall safety net for the insured by ensuring that they are not left with substantial out-of-pocket expenses after exhausting the limits of their primary insurance. The identification of this coverage plays a crucial role for individuals or businesses managing significant risks, ensuring that they have adequate financial support in the event of unforeseen incidents.