Ace the 2025 CII Insurance Exam – Global W01 Challenge: Conquer Your Future!

Excess insurance is designed to provide additional coverage when the losses incurred surpass a predetermined limit established by a primary insurance policy. This means that if the primary insurance has a coverage limit of, for example, $1 million, and a loss occurs that totals $1.5 million, the excess insurance will step in to cover the additional $500,000 beyond the primary insurance limit.

This type of insurance is beneficial for businesses or individuals looking to protect themselves against significant financial losses that could exceed the standard limits of their existing policies. It essentially acts as a supplementary layer of protection that kicks in only after the primary policy has been exhausted.

The other choices do not accurately describe the function of excess insurance. It does not specifically focus on replacing lost income due to interruptions or reducing premiums; rather, these are characteristics associated with other types of coverage or strategies. Additionally, while deductible amounts are a consideration in some insurance policies, the excess insurance's primary focus is on providing coverage above the limits of the primary policy, rather than just addressing amounts over a deductible.