If you fail to notify the excess carrier of a claim, which entity can impose a penalty?

• A. Excess Carrier
• B. State Agency
• C. Policyholder
• D. Third-Party Administrator

Answer: (A)

Notifying the excess carrier promptly is essential because the excess policy relies on timely notice to participate in defense, assess exposure, and preserve the layer of coverage they are underwriting. When notice is delayed or omitted, the excess carrier’s rights under the policy can be compromised, so the contract often includes a penalty clause for late reporting. Since this penalty comes from the terms of the excess policy itself, the entity that can impose it is the excess carrier. A state agency would handle regulatory requirements, and a policyholder or a third-party administrator can’t unilaterally impose the policy’s penalties on the excess layer.