Ace the Alberta General Insurance Level 1 Exam 2025 – Insure Your Success Today!

The main purpose of excess insurance is indeed to offer coverage beyond the limits of a primary insurance policy. This type of insurance provides an additional layer of protection for the insured, which is particularly useful in situations where the costs associated with a claim exceed the limits of the standard policy. For example, if a business has a primary liability policy with a coverage limit of $1 million and faces a claim for $2 million, the excess insurance would cover the additional $1 million that the primary policy does not. This ensures that the policyholder is not left with significant out-of-pocket expenses when facing large claims.

Understanding this function of excess insurance is critical in risk management and financial planning, as it allows individuals and businesses to protect themselves from potentially catastrophic financial losses that could arise from high-cost claims. Hence, excess insurance serves to enhance the overall risk management strategy, giving peace of mind that they have additional coverage available when needed.