If the excess carrier refuses to pay the claim, which action is the most likely described?

• A. Refuse to pay the claim.
• B. Increase the policy limits automatically.
• C. Extend the grace period for payment.
• D. Revoke the insured's coverage.

Answer: (D)

When an excess carrier in a self-insurance plan refuses to pay a claim, the protective layer they were supposed to provide is effectively withdrawn. The most logical consequence in this setup is revoking or terminating the insured’s coverage, since the excess layer can no longer support the risk it was contracted to cover. This outcome reflects a formal end to the coverage arrangement due to the carrier’s refusal to honor the claim, protecting the insurer from continuing exposure under terms that it is not willing to fulfill.

The other options don’t fit this scenario. Refusing to pay is the action the excess carrier has already taken, not a separate consequence described—so it’s redundant. Automatically increasing policy limits isn’t something triggered by a claim denial; it would require a new agreement or endorsement. Extending the grace period for payment deals with premium timing, not with a denied claim or the loss of coverage.