Property and Casualty Insurance Practice Exam

In what scenario does Excess insurance apply?

1. When you have borrowed a vehicle and have no coverage

2. When you own a vehicle and have a primary policy

3. When the insurance for a rented vehicle is greater than your own

4. When using a vehicle not owned by you and other coverage exists

The correct answer is: When using a vehicle not owned by you and other coverage exists

Excess insurance applies in scenarios where there is existing coverage from another policy, and additional coverage is sought. In the context of using a vehicle not owned by you, if there is already insurance coverage in place (for instance, from the vehicle owner’s policy or from your own personal auto policy), excess insurance acts as a secondary layer of protection. This means that if you are involved in an incident with a borrowed vehicle, and the primary policy does not fully cover the damages or injuries incurred, the excess insurance would kick in to cover the remaining amounts after the primary policy's limits have been exhausted. This ensures that individuals can have additional financial protection when other coverage is already in place, rather than depending solely on the primary insurance or facing a potential coverage gap. In this scenario, excess insurance is particularly beneficial because it enhances protection without duplicating coverage, ensuring that all parties have sufficient liability protection.