In terms of auto insurance, what does 'excess liability coverage' mean?

Excess liability coverage refers to a type of insurance that provides additional protection beyond the limits of your primary liability policy. This coverage kicks in when the primary coverage has been exhausted due to claims. Essentially, it serves as a safety net, ensuring that there is extra financial support available for claims that exceed the limits set by the primary policy. This is particularly important in cases where the damages from an accident are substantial, as it helps to cover remaining costs, thereby safeguarding the insured from potential out-of-pocket expenses resulting from legal claims or settlements.

The other options do not accurately describe excess liability coverage. For instance, additional coverage for collision damage pertains specifically to damages to your own vehicle rather than liability to others. Coverage for high-risk drivers usually refers to insurance policies tailored for individuals who may have a history of traffic violations or accidents, and it’s not directly related to excess liability. Lastly, insurance that covers rented properties centers around coverage for physical structures and does not relate to liability coverage at all. Thus, the correct interpretation of excess liability is indeed that it applies only after primary coverage is exhausted, providing an essential layer of financial protection.