If you fail to notify the excess carrier of a claim, the excess carrier may:

• A. Sue you for the full policy premium.
• B. Cancel the policy for non-disclosure.
• C. Three times the amount unlawfully collected.
• D. Impose a premium surcharge.

Answer: (C)

Failing to notify the excess carrier of a claim triggers a penalty designed to deter concealment and protect the integrity of excess coverage. In California, the excess carrier has the right to recover three times the amount unlawfully collected when there’s nondisclosure or failure to disclose a claim. This treble-damages remedy reflects the seriousness of depriving an insurer of timely information needed to defend and manage a claim, and it serves to shift the risk back toward the party who withheld information.

The other remedies listed aren’t the standard response to this situation. Suing for the full policy premium, canceling the policy for non-disclosure, or simply imposing a premium surcharge don’t capture the statutory penalty intended for misrepresentation or concealment related to a claim. The triple-damages remedy best fits the goal of discouraging nondisclosure and protecting the excess carrier’s interests.