In which situation would an insured's home state change?

The correct answer is tied to the scenario where an insured changes their residence. An individual's home state is typically defined as the state where they maintain a permanent residence and the one from which they primarily conduct their affairs.

When the insured relocates to another state, their home state accordingly changes to reflect their new permanent residence. This transition is significant because it may impact the insurance policies they hold, including surplus lines coverage, which often adhere to specific regulations based on the home state.

The other options do not directly affect an insured's home state. For instance, if the insured's risk is located entirely in one state, or if there are multiple insureds from an affiliated group, these factors pertain to risk management and group coverage rather than the determination of a single insured's home state. Similarly, a decrease in net worth does not have any bearing on geographical residency status. Thus, these factors do not trigger a change in the designation of the insured's home state.