Attachment point is a term commonly used in the insurance industry to refer to the threshold at which an insurance policy begins to provide coverage for a loss. The attachment point may refer to the dollar amount of a claim or the level of loss experience that triggers coverage.
Attachment Point in More Detail
In insurance, the attachment point is often used in the context of excess or umbrella liability policies. These policies typically have a higher attachment point than primary policies, meaning that the policyholder must first exhaust the coverage provided by the primary policy before the excess or umbrella policy kicks in.
Understanding the attachment point is crucial for insurers and policyholders, as it helps them determine the appropriate level of coverage needed to protect against potential losses. By setting an attachment point, insurers can limit their exposure to losses, and policyholders can ensure they are adequately protected while avoiding unnecessary premium costs.
