Which statement best describes the relationship between excess coverage and primary coverage?

• A. Excess kicks in only after the underlying primary coverage is exhausted.
• B. Excess pays first, then primary.
• C. They cover different parties.
• D. Excess coverage only applies to medical expenses.

Answer: (A)

Excess coverage sits above the primary coverage and is designed to pay only after the primary policy has paid up to its limit. In practice, a claim is first handled by the primary coverage up to its limit; if the claim amount exceeds that limit, the excess policy covers the remaining amount up to its own limit. For example, with a $1 million primary limit and a $5 million excess limit, a $2 million claim would be paid as $1 million by the primary and $1 million by the excess. This ordering is why the statement is correct: the excess does not pay first, it steps in after the primary is exhausted. The excess and primary cover the same risk exposure, just at different layers, not different parties, and excess coverage is not restricted to medical expenses.