What is the main difference between 'primary' and 'excess' insurance?

The main difference between primary and excess insurance lies in the order of coverage they provide in the event of a loss. Primary insurance is the first layer of coverage that responds to a claim. This means that when a loss occurs, the primary insurance will pay out up to its limit before any other policies are activated.

On the other hand, excess insurance comes into play only after the limits of the primary insurance have been exhausted. It provides additional coverage on top of the primary policy, ensuring that if the loss is significant and surpasses the limits of the primary coverage, the excess insurance will cover the remaining amount up to its own limit.

This distinction is crucial for policyholders to understand, as it affects their overall insurance strategy, risk management, and potential financial exposure in case of significant claims. Understanding this ordering is essential for anyone involved in the underwriting process or managing insurance portfolios in the London Market.