Other Than Life (OTL) Practice Exam

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Prepare for the Other Than Life (OTL) Exam. Study with multiple choice questions, each with hints and explanations. Get ready for your insurance exam today!

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Which type of policy requires a higher premium due to increased risk?

Standard policy
Specialty policy
Basic policy
Regular policy

The correct answer is: Specialty policy

A specialty policy typically requires a higher premium due to the increased risks associated with the coverage provided. These policies are designed to cover unique or high-risk situations that standard policies may not adequately address. For instance, specialty insurance can include areas such as professional liability, unique collectibles, or high-value assets, which may carry higher exposures to loss or damage compared to more conventional risks. Consequently, the premiums are adjusted to reflect this elevated level of risk, ensuring that the insurer can adequately cover any potential claims. The other types of policies mentioned often cater to more standard or typical insurance needs with lower associated risks, leading to comparatively lower premiums. This dynamic highlights why specialty policies specifically command a higher premium.