You are applying for a master certificate after July 1, 1994. What is the amount of net worth and net income needed 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 5 years of at least $500,000
• D. $7,500,000 net worth and $700,000 earnings in the past year

Answer: (C)

The question tests the financial qualifications required to qualify for self‑insurance with a master certificate issued after July 1, 1994. The standard combines a net worth threshold with a profitability history: you must have at least $5,000,000 in net worth and an average net income of at least $500,000 per year over the past five years. This ensures the entity has both a solid balance sheet and consistent profitability.

The correct numbers align exactly with those criteria: $5,000,000 net worth and an average annual net income of at least $500,000 over the last five years. Other options fail because they either show a lower net worth, or rely on earnings from just the past year rather than a five-year average, or present a mismatch between the net worth and income requirements.