What type of insurance policy only pays for a loss after a primary policy has exhausted its limit?

An excess policy is designed to provide additional coverage above and beyond the limits of a primary insurance policy. In situations where the primary policy has reached its limit due to a loss, the excess policy kicks in, covering the remaining amount up to its own limit. This is particularly useful in scenarios where an individual or business faces substantial liabilities that could exceed the base coverage offered by a primary policy.

For instance, if a primary liability policy covers claims up to $1 million and a loss occurs that amounts to $1.5 million, the excess policy would cover the remaining $500,000. This layering of coverage allows for greater financial protection without requiring a separate primary policy for every possible risk, as the excess policy will only respond once the limits of the primary policy are exhausted.

The other types of policies mentioned do not fit this scenario: a primary policy is the initial layer of coverage, a supplemental policy usually adds additional coverage for specific needs or risks, and a comprehensive policy generally refers to coverage that includes multiple types of risks without necessarily operating in a hierarchical manner like an excess policy does.