What is the difference between primary and excess insurance?

Primary insurance is the first line of protection for someone with an insurance policy. It is the main policy that covers the insured’s liability for any covered damages. The primary insurer is responsible for paying out any claims up to the policy limit, at which point the excess policy kicks in. Excess insurance is a supplemental form of liability insurance that comes into effect when the coverage limits of the primary insurance have been reached. In California, primary insurance is regulated by the California Department of Insurance (CDI). The CDI ensures that the primary insurance carrier is licensed and in good standing, follows the state’s insurance laws, and carries enough reserves to pay out any claims that arise. Excess insurance, however, is not regulated by the CDI. Excess carriers are typically licensed and regulated by the insurer’s home state, as California does not have a specific insurer’s licensing program. The excess policy is also not subject to the same rules and regulations as the primary policy, as the carrier can choose to set their own limits and conditions. In short, the main difference between primary and excess insurance is that the primary insurer is regulated and responsible for paying out any claims up to the policy limit, while the excess insurer is not regulated and is only responsible for covering any claims that exceed the primary policy’s limits.

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What is the difference between primary and excess insurance?

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