DEFINITION of 'Manual Excess'

The premium charged for insurance coverage above the liability limit. Manual excess rates are determined based on the risk factors associated with the coverage, such as the type of liability being covered and the estimated severity and frequency of losses. Manual excess insurance is a form of temporary excess insurance.

BREAKING DOWN 'Manual Excess'

A company purchases insurance policies to cover against risks that it has identified. While a company may purchase a policy with a large aggregate limit on its coverage, this can be expensive, prompting the company to try to only purchase the amount of coverage that it really needs.

For many companies, the amount of coverage purchased is enough to cover them against perils, but situations may arise in which the company bumps up against its limit before the policy period has been reached. Some risks that a policyholder insures against may reduce the difference between the coverage limit outlined in the policy and the average risk. This can lead to a situation in which the insured will bump up against the limit, or may exhaust the aggregate coverage limit entirely. If the limit is exhausted the insured will be responsible for all claims until the limit is reset, which carries great risk if the insured experiences a severe claim. The insured may want to increase the aggregate limit for the amount of time remaining on the policy, and the insurer may offer an increased limit for an additional premium.

Insurance companies determine what to charge for additional coverage limits by examining the risk factors associated with the policy type. The data collected is used to create manual excess limit tables. These additional limits only apply until the end of the policy period, and the excess aggregate limit applies after the date that the additional limit was purchased.

RELATED TERMS
  1. Excess Limits Premium

    Excess limits premium is the premium paid for coverage above ...
  2. Coincidental Excess Coverage

    Insurance coverage that provides excess coverage for a specified ...
  3. Coordination Of Coverage

    A review or modification of an individual's or business’ insurance ...
  4. Insurance Premium

    The amount of money that an individual or business must pay for ...
  5. Aggregate Excess Insurance

    An insurance policy that limits the amount that a policyholder ...
  6. Liability Insurance

    Any type of insurance policy that protects an individual or business ...
Related Articles
  1. Insurance

    Insurance, Excess Insurance and Reinsurance: What's the Difference? (ALL)

    Understanding the differences might help you avoid being overinsured or underinsured.
  2. Insurance

    For Top-Notch Insurance Coverage, Compare Quotes

    Find out how to use and compare policy options to get the best coverage at the best price.
  3. Insurance

    Do You Need Casualty Insurance?

    Find out how different types of coverages can protect you and which policy is right for you.
  4. Insurance

    4 Reasons Why Waiting To Buy Life Insurance Is a Bad Idea

    Understand the benefits of applying for and securing life insurance coverage while you are young and healthy, and learn the cost of waiting to get coverage.
  5. Financial Advisor

    Who Should Buy a Guaranteed Issue Life Insurance Policy?

    Guaranteed issue life insurance policies have added costs and reduced benefits that make them suitable for only a limited pool of buyers.
  6. Financial Advisor

    7 Issues to Consider When Determining Life Insurance Coverage

    Seven issues to consider when buying life insurance to ensure the coverage is tailored to meet your personal financial situation.
  7. Insurance

    When Should You Get Supplemental Life Insurance?

    For individuals with larger families and responsibilities, supplemental life insurance may bridge the shortfall in coverage from term or whole-life policies.
  8. Insurance

    Insurance Coverage: A Business Necessity

    Don't go to work without this policy in place - especially if your work is in your home.
  9. Financial Advisor

    Group Term Life Insurance: What You Need to Know

    Is group term life insurance really a good deal? What you need to know about employer-sponsored group term life insurance coverage.
  10. Insurance

    What Is and Isn't Covered by Homeowners Insurance

    Understanding what your insurance covers can be confusing. Learn what almost all insurance policies have in common so you're prepared if disaster strikes.
RELATED FAQS
  1. How are open market operations and monetary policy related?

    Understand the meaning of an aggregate limit in an insurance policy as well as which types of insurance companies are most ... Read Answer >>
  2. What are some examples of industries that practice price discrimination?

    Understand the various types of insurance coverage offered in the insurance marketplace, and learn why each policy should ... Read Answer >>
  3. What caused the European / Eurozone debt crisis?

    Understand how insurance companies price insurance premiums, and learn the importance of data and statistics in the insurance ... Read Answer >>
  4. Can my insurance company refuse me coverage?

    Insurance isn't always as straightforward as other products. Insurers can deny coverage in many different instances:Non-Renewal ... Read Answer >>
  5. Can your insurance company cancel your policy without notice?

    Learn about your rights as an insured when it comes to your insurance policy being canceled, including how to access your ... Read Answer >>
Hot Definitions
  1. Leverage Ratio

    Any ratio used to calculate the financial leverage of a company to get an idea of the company's methods of financing or to ...
  2. Two And Twenty

    A type of compensation structure that hedge fund managers typically employ in which part of compensation is performance based. ...
  3. Market Capitalization

    The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying ...
  4. Expense Ratio

    A measure of what it costs an investment company to operate a mutual fund. An expense ratio is determined through an annual ...
  5. Mezzanine Financing

    A hybrid of debt and equity financing that is typically used to finance the expansion of existing companies. Mezzanine financing ...
  6. Long Run

    A period of time in which all factors of production and costs are variable. In the long run, firms are able to adjust all ...
Trading Center