In what scenario is excess insurance most beneficial?

Excess insurance is designed to provide additional coverage when the limits of a primary insurance policy have been exceeded. This scenario is most beneficial when an individual or organization experiences a loss or liability claim that surpasses the financial protection offered by their primary policy. For example, if a business has a primary liability policy with a $1 million limit and faces a claim that totals $1.5 million, the excess insurance kicks in to cover the additional $500,000 not covered by the primary policy.

In contrast, while losing a primary policy, filing a claim, or obtaining new insurance are important considerations, these scenarios do not specifically highlight the core purpose of excess insurance, which is to enhance coverage beyond the limits of a primary policy. Therefore, the situation in which coverage needs exceed the primary policy limits is the context where excess insurance demonstrates its maximum value.