Question

ABC Insurance retains the first $1 million of each property damage loss and purchases insurance 22) for that part of any property loss that exceeds $1 million. The insurance for property losses above $1 million is called
A) coinsurance
B) excess insurance
C) liability insurance.
D) primary insurance.

Answer 1

Answer:

B) excess insurance

Explanation:

Excess insurance is also known as excess waiver insurance and is amount that will be paid in case of an accident that exceeds normal insurance cover. The amount covered by excess insurance is agreed between the beneficiary and the insurance company.

It protects one against excess charges in cases where a car is stolen or damaged.

For example of you hire a car that has standard insurance, and it is involved in an accident. If the damage is above the limit of insurance cover you will have to pay the rental company the excess for the repairs. Excess insurance covers costs that are high, with some covering up to $6,000.

So if ABC purchases insurance for part of property loss that exceeds $1 million, they are purchasing excess insurance to protect themselves from loss.