Secondary Insurer (Excess)

A secondary insurer, also known as an excess insurer, is an insurance company that provides coverage for losses that exceed the limits of the primary insurance policy. In other words, the secondary insurer pays out claims only after the primary insurance policy has been exhausted.

Here are some key features of a secondary insurer:

• Provides coverage for losses that exceed the limits of the primary insurance policy.

• Pays out claims only after the primary insurance policy has been exhausted.

• The amount of coverage provided by the secondary insurer is typically specified in the insurance contract.

• The secondary insurer may have different coverage terms and conditions than the primary insurer, such as different deductibles, limits, and exclusions.

• The cost of the secondary insurance policy is generally lower than that of the primary insurance policy, since it provides coverage only in excess of the primary policy.

For example, let's say a business has a primary liability insurance policy with a limit of $1 million and a secondary liability insurance policy with a limit of $2 million. If the business is sued for damages in excess of $1 million, the primary insurer will pay out up to its limit of $1 million, and the excess amount will be covered by the secondary insurer up to its limit of $2 million.

‍