What is one advantage of using excess insurance?

One significant advantage of using excess insurance is that it provides additional coverage, which acts as a safeguard against significant losses. This type of insurance kicks in once the limits of the primary insurance policy have been exhausted, ensuring that the policyholder is protected from potentially catastrophic financial impacts that could arise from large claims. By having excess insurance, organizations and individuals can manage their risk more effectively, rather than solely relying on the coverage provided by a primary policy, which may have limits that could be reached in severe situations.

While there may be benefits associated with reducing premiums or specific claims processes, those do not directly relate to the core purpose of excess insurance, which is to provide an extra layer of financial protection. The value of this type of insurance becomes particularly apparent in industries or scenarios where the possibility of large claims exists, thus reinforcing the importance of maintaining such coverage for comprehensive risk management.