Penetration Sample Clauses

The Penetration clause defines the extent to which an insurance policy will cover losses after other applicable insurance has been exhausted. In practice, this clause specifies that the insurer will only pay for damages or losses that exceed the limits of any primary or underlying insurance policies. For example, if a business has both primary and excess liability coverage, the Penetration clause clarifies when the excess policy begins to pay. Its core function is to allocate risk between multiple insurers and ensure there is no overlap or gap in coverage, providing clarity on how claims are handled when several policies are involved.