Melinda: Hazard insurance decreases an individual’s risk

KAPLAN OFFICIAL EXPLANATION

(C) Method of Argument

The question stem guides your analysis of the stimulus – that’s why reading the stem is Step 1 of the Kaplan Method.

We know before even reading the two speakers’ arguments that we’re looking for an ambiguously used term in Melinda’s argument, so let’s read the arguments with that ambiguity in the front of our minds. Melinda argues that an individual can decrease his or her risk with hazard insurance because such insurance spreads the risk among many policyholders. Jack disagrees, arguing that there is no relationship between owning hazard insurance and the likelihood of his house burning down. Jack’s point is valid as long as he understands Melinda to be arguing about accident risk. But Melinda could just as easily be talking about financial risk. This ambiguity is exactly what we’re looking for, so (C) must be the answer.

(A) Jack may disagree that hazard insurance “judiciously spreads” risk, but there’s no ambiguity in the way Melinda’s using this term; it can only have one meaning.

(B) The term “many policyholders” isn’t even addressed by Jack, so there’s no way his response can “trade on an ambiguity” with respect to this term.

(D) and (E) are both terms that are understood consistently between Melinda and Jack. Jack doesn’t disagree with Melinda because of the way she uses either of these terms.