When does excess liability insurance come into effect?

Excess liability insurance is designed to provide coverage that kicks in when the limits of the underlying base policy, such as a primary liability policy, have been exhausted. This type of insurance acts as a supplemental layer of protection that covers claims that exceed the designated limits of the underlying policy.

When you have an excess liability policy, it will only provide coverage once the limit of the base policy has been reached. This means that if a claim amount surpasses the limits established in the primary insurance policy, the excess policy will then come into play to cover the additional costs, protecting the insured from potentially significant financial loss.

The other options reflect scenarios that do not correctly describe when excess liability insurance provides coverage. For example, it does not activate before the base policy limits are reached, after all claims have been settled, or when a deductible is applied. Thus, the assertion that the insurance comes into effect after the base policy limits are reached is indeed accurate.