What is specific excess insurance?

What is specific excess insurance?

• A. Controls loss severity by placing a cap on losses the insured must pay arising out of a single occurrence.
• B. Addresses loss frequency by providing covereage once a cumulative per occurrence loss limit is breached.
• C. Covers losses without limit.
• D. Is a type of primary insurance.

Answer: (A)

Specific excess insurance is written to limit the insured’s exposure for a single event by setting a cap on what the insured must pay for that occurrence. It sits above the primary policy and pays only after the per-occurrence limit of the primary policy is reached, covering the amount above that limit up to the excess policy’s limit. This structure focuses on the size of a single loss (severity) for one incident, not how often incidents occur (frequency). It is not unlimited, not primary, and it doesn’t automatically cover multiple occurrences beyond the single-event cap.

Specific excess insurance is written to limit the insured’s exposure for a single event by setting a cap on what the insured must pay for that occurrence. It sits above the primary policy and pays only after the per-occurrence limit of the primary policy is reached, covering the amount above that limit up to the excess policy’s limit. This structure focuses on the size of a single loss (severity) for one incident, not how often incidents occur (frequency). It is not unlimited, not primary, and it doesn’t automatically cover multiple occurrences beyond the single-event cap.