Question

    In a "hard market," what typically happens to insurance

    premiums and coverage?
    A Premiums decrease and coverage is expanded. Correct Answer Incorrect Answer
    B Premiums increase and coverage is restricted Correct Answer Incorrect Answer
    C Premiums remain stable and coverage is expanded Correct Answer Incorrect Answer
    D Premiums remain stable and coverage is restricted Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    The correct answer is B. Premiums increase and coverage is restricted. In a hard market, insurers become more selective in the risks they underwrite, often reducing coverage and increasing premiums to maintain profitability.

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