In a dual-policy scenario where one policy is labeled excess, what is the payment sequence?

• A. The excess policy pays first
• B. The other policy pays first
• C. The primary policy pays first and the excess pays after
• D. Pro rata between policies

Answer: (C)

In a dual-policy setup with one policy labeled as excess, the arrangement is that the primary policy pays first, and the excess policy kicks in only after the primary has paid up to its limit. The excess coverage then pays the remaining eligible amount, up to its own limit. If the loss is fully covered by the primary policy, the excess pays nothing. For example, if the loss is 100,000 and the primary limit is 60,000 while the excess limit is 50,000, the primary pays 60,000 and the excess pays 40,000. If the loss is only 55,000, the primary pays 55,000 and the excess pays nothing. This is why the sequence is primary first, then excess, rather than the excess paying first or pro rata sharing.