What typically triggers the consideration of excess insurance?

The consideration of excess insurance is commonly triggered by a significant loss event. This type of insurance is designed to kick in when the limits of primary insurance policies have been exhausted due to high-value claims. When a substantial loss occurs, the insured party may find that the coverage provided by their primary policies is insufficient to cover the entirety of the financial repercussions.

In such scenarios, excess insurance becomes an important resource, as it can provide additional coverage over and above the limits of those primary policies, thereby offering greater financial security and protection against catastrophic losses. The need for excess coverage is heightened during significant loss events because the potential for remaining liability after exhausting primary coverage can lead to financial strain for the insured. Thus, this response aligns directly with the function and purpose of excess insurance in risk management.

Other factors, such as policy renewal time, an insurer's funding availability, or routine audits of claims, may have their own implications in the insurance process but are not the primary drivers for considering excess insurance.