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Excess insurance is characterized by its function of providing additional coverage after the limits of a primary insurance policy have been exhausted. This means that once the primary insurer has paid out its maximum limit for a particular claim, any remaining costs are covered by the excess insurance. This coverage is crucial for policyholders who are concerned about the possibility of large losses that could surpass their primary policy limits.

The other options do not accurately describe excess insurance. Coverage that includes the entire loss without limitation is typical of certain types of policies, such as comprehensive coverage, rather than excess insurance. The assertion that excess insurance provides coverage before the primary insurance pays describes a different kind of insurance known as excess-and-deficit or umbrella insurance, which could potentially provide coverage over and above the primary policy from the outset. Lastly, the statement regarding first-party insurance focuses on insurance that covers the policyholder's own losses rather than the role of excess insurance, which is designed to address liability above primary coverage limits. Thus, the defining characteristic of excess insurance is its position as a secondary layer of coverage that kicks in only after the primary insurance has fulfilled its obligation.