Which of the following is true about excess insurance?

The statement that excess insurance provides coverage above the limits of primary insurance is accurate. Excess insurance is specifically designed to kick in once the limits of the underlying primary insurance policy have been exhausted. This means that if a loss occurs that exceeds the coverage provided by the primary insurer, the excess insurance policy will cover the additional costs up to its own limit.

This arrangement is particularly important for individuals or businesses that want to protect themselves against catastrophic losses that could significantly surpass the limits of their primary insurance. It acts as a financial safety net, ensuring that larger claims are addressed without leaving the policyholder vulnerable to substantial out-of-pocket expenses.

The other options do not accurately describe the nature of excess insurance. It is not a primary insurance policy, meaning it does not provide the first layer of coverage but rather complements it. Moreover, excess insurance is not mandatory for all policyholders, as it is typically purchased based on individual needs or risk assessments. Lastly, while deductibles are often a feature of primary insurance policies, excess insurance can also have its own deductible provisions, which means it does not entirely eliminate the need for deductibles in all cases.