For a master certificate issued after July 1, 1994, what is the required net worth and average net income over the past five years to qualify for self-insurance?

• A. $2,220,000 net worth and $220,000 earnings in the past year
• B. $5,000,000 net worth and $500,000 earnings in the past year
• C. $5,000,000 net worth and average net income for the past five years of at least $500,000
• D. $7,500,000 net worth and $700,000 net income in the past year

Answer: (C)

To qualify for self-insurance with a master certificate issued after July 1, 1994, you must demonstrate both a solid net worth and a steady, long-term profitability. Specifically, the requirement is a net worth of $5,000,000 and an average net income over the past five years of at least $500,000. This combination shows you have the financial cushion to cover potential claims and a history of ongoing profitability, not just a single strong year.

Why this is the best answer: it satisfies both parts of the standard—sufficient net worth and a five-year average income at or above the threshold—reflecting long-term financial stability needed to self-insure.

Why the other options don’t fit: one option falls short on net worth, so the financial cushion isn’t enough. Another option meets the net worth requirement but relies on earnings in the past year rather than the required five-year average, which doesn’t meet the established standard. The remaining choice options either don’t specify the five-year average or imply a different measure, which isn’t the criterion here.