What does excess insurance coverage provide for group self-insurers?

• A. It covers the portion of liabilities that exceed the primary coverage limits
• B. It supplements the primary coverage by providing additional limits after the primary is exhausted
• C. It is used instead of the primary coverage
• D. It covers liabilities that exceed the primary coverage limits

Answer: (D)

Excess insurance provides a secondary layer of liability protection that sits above the primary coverage. It doesn’t replace the primary policy and it typically doesn’t pay for losses that fall within the primary limit; instead, it comes into play when losses exceed the amount covered by the primary policy. For group self-insurers, this means the excess coverage kicks in to handle the portion of a claim that goes beyond the primary coverage limits, providing additional protection up to its own limit. For example, with a primary limit of one million and an excess layer of four million, a loss exceeding one million would be paid by the excess up to four million, protecting the self-insurer from large out-of-pocket costs.