AINS Ch. 9 Quiz Questions
Which one of the following does Part Three—Other States Insurance of the Workers Compensation and Employers Liability Insurance Policy require the insured to do?
"Tell us at once if you begin work in any state listed in Item 3.C of the Info Page"
Gertrude Anderson and Associates (GAA), an accounting firm, is busy preparing year-end reports for its many clients. To help deal with the peak in workload, the firm contacts Accounting Temporaries, a temporary placement agency. The agency provides three experienced bookkeepers for a period of three weeks. While working at GAA, one of the temporary employees injures her back picking up a heavy box of documents. Which one of the following best describes how her workers compensation claim would be handled?
Accounting Temporaries work comp insurer would cover the claim because a temporary employee is an employee of the providing firm, not the firm using his or her services
The coverage provided by Part One of the Workers Compensation and Employers Liability Insurance Policy obligates the insurer to pay which one of the following on behalf of the insured?
All compensation and other benefits required by the work comp law of any state listed in Item 3.A of the Info Page
Which one of the following would be covered under Part Two of the Workers Compensation and Employers Liability Insurance Policy? Select one: A. An employee is injured in an unlisted state where the employer just opened a new store. B. A member suffers from anxiety after being harassed by fellow employees. C. An employee is exposed to disease during the policy period but symptoms don't appear until after the employee is fired. D. A number of a fishing boat's crew is injured while performing routine maintenance aboard the ship.
An employee is exposed to disease during the policy period but symptoms don't appear until after the employee is fired
Which one of the following is a reason an insured might reimburse its workers compensation and employers liability insurer?
An illegally employed individual suffered an occupational injury
Which one of the following is an example of a loss covered by Part Two—Employers Liability Insurance?
An injured employee sues a third party who, in turn, sues the injured person's employer for negligence that resulted in the injury
Federal workers compensation statutes apply to which one of the following workers?
An interstate railroad worker
To be covered under a workers compensation statute, an injury or disease (in most states) must meet which one of the following requirements?
Arise out of and in the course of the employment
Which one of the following statements is true regarding the basis of premium for workers compensation insurance? Select one: A. The premium base for workers compensation insurance varies by the type of business classification involved. B. The insured pays an estimated premium based on an estimate of the annual revenue. C. A premium auditor may examine the insured's records at the end of the policy period to determine the actual payroll. D. The premium base for workers compensation insurance is usually determined by the degree of hazard in the work performed.
C. A premium auditor may examine the insured's records at the end of the policy period to determine the actual payroll
Part Two of the Workers Compensation and Employers Liability Policy (WC&EL) is the employers liability portion of the policy. Under this portion of the policy the insurer would pay for
Claims that are not covered by a work comp statute
A toy manufacturer operates in Pennsylvania, New Jersey, and Delaware. While at a convention in Colorado, a salesperson is injured. The employee elects Colorado as his benefit state for workers compensation. How would a standard workers compensation policy address out-of-state injuries?
Coverage would extend since the injury arose out of employment and was incidental to the insured's work
What does the voluntary compensation and employers liability endorsement provide coverage for?
Covers employees not subject to work comp statutes
Everything You Need, Inc., (EYN) produces a variety of travel bags & luggage for consumer use. EYN has manufacturing locations in Pennsylvania and New York. Due to growing demand, EYN plans to expand operations into New Jersey and Delaware. EYN has a Workers Compensation and Employers Liability Insurance Policy (WC&EL policy) in effect for the policy year January 1, 20x1 to December 31, 20x1. EYN's insurer is licensed in all states. EYN's policy lists Pennsylvania and New York in Item 3.A of the Information Page of the WC&EL policy. The New Jersey and Delaware sites were not in operation on the effective date of policy, January 1, 20x1, but are expected to begin operations during 20x1. If EYN wants to have coverage under its policy for the New Jersey and Delaware operations, what action should EYN take?
EYN should have the New Jersey and Delaware operations listed in Item 3.C of the Info Page
While workers compensation benefits are considered an exclusive remedy, there are legal grounds other than workers compensation law that can give rise to a claim for an employee injury. Based on this exposure, most employers also carry which one of the following coverages?
Employers liability
If the premium applicable to a particular workers compensation insured is increased or decreased for a future period based on that insured's loss experience for a period in the recent past, the policy uses which one of the following types of rating plans?
Experience rating
Which one of the following is a workers compensation rating plan that rewards the insured for successfully controlling its losses?
Experience rating plan
Which one of the following statements is true with regard to workers compensation statutes? Select one: A. A corporation that uses independent contractors, leased employees and temporary employees must provide workers compensation for all of them. B. Federal government workers are excluded from workers compensation because they are covered under alternate plans. C. Rehabilitation benefits are not required benefits by the laws of most states. D. The percentage of wage loss payable as a death benefit is a flat amount for every state regardless of the number of dependents.
Federal government workers are excluded from work comp because they are covered under alternate plans
Which one of the following describes a coverage trigger applicable to Part Two—Employers Liability Insurance?
For bodily injury by accident, the policy that is in effect when the injury occurs is the policy that applies
What do you call the one classification that best describes an insured's activities? - Governing classification - Broad exception classification - Standard exception classification - Not otherwise classified classification
Governing classification
What do you call the one classification that best describes the insured's activities? - Governing classification - Broad exception classification - Standard exception classification - Not otherwise classified classification
Governing classification
Which one of the following statements is correct with respect to large deductible workers compensation plans?
It allows the insured to self-insure most of its work comp claims without establishing a qualifying self-insurance plan
Which one of the following best describes the effect of the United States Longshore and Harbor Workers' Compensation Act (LHWCA) Endorsement?
It amends the definition of work comp law to include the LHWCA with respect to operations in any state designated in the endorsement's schedule
Which one of the following best describes the other states insurance provided in Part Three of the Workers Compensation and Employers Liability Insurance Policy?
It automatically extend work comp and employers liability coverage to the insured's operations in any state listed in Item 3.C of the Info Page
Which one of the following statements about Part One of the Workers Compensation and Employers Liability Policy is true? Select one: A. It shows dollar limits for benefits. B. It does not provide for litigation costs. C. It contains no exclusions. D. It does not provide for expenses for investigating claims.
It contains no exclusions
Which one of the following statements is true with respect to Part One of the Workers Compensation and Employers Liability Policy? Select one: A. It defines important terms such as "workers compensation law", "we" and "you." B. It covers all operations of the employer except those otherwise insured or specifically excluded by endorsement. C. It covers the employer only for those locations and employees listed on the Information Page. D. It takes precedence if the policy and the applicable workers compensation law conflict.
It covers all operations of the employer except those otherwise insured or specifically excluded by endorsement
Which one of the following statements about employers liability coverage is true? Select one: A. It includes defense costs within the applicable policy limits. B. It does not cover punitive damages for injury or death of any illegally employed person. C. It includes liability assumed under contract. D. It does not cover third-party-over claims.
It does not cover punitive damages for injury or death of any illegally employed person
Which one of the following statements is correct with respect to limits of liability applicable to Part Two—Employers Liability Insurance? Select one: A. Punitive damages are covered in addition to the limits of liability. B. Supplementary payments are covered within the stated limits of liability. C. It includes a property damage by accident limit. D. It includes a bodily injury by disease policy limit.
It includes a bodily injury by disease policy limit
Which one of the following best describes the effect of the Voluntary Compensation and Employers Liability Endorsement?
It obligates the insurer to pay an amount equal to the compensation benefits that would be payable if exempt employees were subject to the work comp law
Mike, a general contractor, is constructing a large warehouse. He hires Dave to do the electrical work. Dave agrees to complete the work within two weeks, and he uses his own ladder and tools. While working at the site, Dave fails to secure his ladder. The ladder collapses and Dave falls, injuring his back. Which one of the following statements is correct with regard to Mike's Workers Compensation and Employers Liability Insurance (WC&EL) Policy?
It will NOT cover Dave because Dave is an independent contractor
Frederico is a punch press operator at Tillson-Jones Manufacturing (TJM). When his press malfunctions, Frederico's hand and arm are badly mangled and he suffers a below-the-elbow amputation. Frederico sues the manufacturer of the punch press for his injuries and is awarded damages. The manufacturer then sues TJM to recover the damages it paid to Frederico, alleging poor maintenance of the equipment, insufficient employee training, and negligence in not requiring employees to use safety guards. TJM is insured under a Workers Compensation and Employers Liability Insurance (WC&EL) Policy. Which one of the following best describes how TJM's insurer would respond?
It would defend TJM against the manufacturer's suit and pay any common-law damages that TJM becomes legally obligated to pay
Warren works at Omega Corporation (Omega). One morning while walking to work, Warren is hit by another Omega employee riding her bicycle to work. He suffers a permanent partial disability. Which one of the following statements is correct with regard to Omega's workers compensation insurance?
It would not provide coverage because injuries occurring while traveling to or from work at a fixed location are generally not covered
Which one of the following items found in the information page specifies which states the workers compensation policy applies?
Item 3
Employers liability insurance covers an employer against which of the following?
Its liability for an employee's occupational injury or disease that is not covered by a work comp statute
Jack, employed at KZ Industries (KZ), is injured in a work accident and suffers a permanent partial disability. Because Jack is unable to perform many of his household chores, his wife, Lucy, hires a handyman to perform those chores. Lucy sues KZ for the cost of the handyman, claiming loss of services. Which one of the following statements is correct?
KZ's employers liability policy would defend the claim and pay any damages
Employers liability insurance excludes which one of the following?
Liability assumed under contract
Employer's liability would provide coverage for which one of the following claims?
Loss of services
Which one of the following best explains why the premium discount plan for workers compensation insurance provides an increasing credit for premiums in excess of a certain minimum?
Many of the expenses of providing work comp insurance do not increase proportionately with increases in premium
The management of Maryland Marine Co. (MMC) must ensure that proper coverage is obtained for work- related injuries. The employee population of MMC is a mixture of full-time and part-time employees as well as some casual employees for one-time tasks. Much of MMC's work is done by independent contractors and temporary employees during peak seasons. Which one of the following statements about these persons is true?
Many states work comp statutes exclude casual labor (short-term employees)
The typical workers compensation statute provides payment for which one of the following?
Medical bills for an injury sustained by an employee while working
Which one of the following must an insurer pay on behalf of the insured according to Part One of the Workers Compensation and Employers Liability Insurance Policy?
Medical payments for a claimant who was exposed to a disease during the policy period but filed a claim two years after retiring
Purchasing workers compensation insurance from a private insurer is one way employers demonstrate their ability to pay their financial obligations to injured workers. Which one of the following is another acceptable method of meeting this obligation?
Meeting state requirements to qualify as a self-insurer
Joe signs a contract with Home Builders to install the electrical wiring for a new home. He uses his own tools and follows the specifications in the contract. Joe is burned while installing the wiring. Does Home Builders' workers compensation policy cover Joe's injury?
No, because Joe is not an employee of Home Builders
Workers compensation statutes require employers to demonstrate financial ability to pay any claims that might arise. Possible methods for meeting this obligation include which one of the following?
Obtain coverage from an assigned risk plan
Omicron Corporation currently does business in Colorado, Wyoming, Nebraska, and Kansas. These states are listed in Item 3.A on the Information Page of Omicron's Workers Compensation and Employers Liability Insurance Policy. The company is hoping to expand its operations into Utah, Arizona, and New Mexico during the next year. Which one of the following statements is correct?
Omicron should include Utah, Arizona, and New Mexico in Item 3.C on the Info Page ad advise the insurer immediately if the company begins operations in any of those states
Which one of the following statements is correct regarding the application of workers compensation laws in foreign countries?
Only a few countries have work comp laws comparable to those found in the US and Canada
All of the following are benefits provided by state workers compensation laws, EXCEPT:
Pain and suffering benefits
Exclusions are generally very common in all insurance policies. Which one of the following is a correct statement regarding the exclusions in Part One of the standard Workers Compensation and Employers Liability (WC&EL) Insurance Policy?
Part One contains no out right exclusions
The workers compensation laws of some states are inapplicable to which one of the following?
Partners, sole proprietors, or exec officers
With only a few exceptions, the premium base for workers compensation insurance is...
Payroll
Part One of the Workers Compensation and Employers Liability Insurance Policy provides that the insured will reimburse the insurer for which one of the following? Select one: A. Common-law liability for occupational injury to employees. B. Any benefits paid even though the employer has failed to comply with policy conditions. C. Penalties required under a workers compensation law because of the employer's willful misconduct. D. Benefits paid to employees with pre-existing injuries.
Penalties required under a work comp law because of the employer's willful misconduct
Which one of the following requirements must be met before an employer may operate a "qualified" self-insurance workers compensation plan?
Posting a surety bond
The workers compensation and employers liability (WC&EL) policy primarily covers an employer's obligation to pay benefits required by workers compensation statutes, but also
Protects the employer against claims or suits for bodily injury to an employee when the work comp statute does not eliminate the right to sue the employer
Angela, a zookeeper, travels to another zoo at her employer's request in order to borrow a rare bird. During the return trip, Angela is exposed to a virus carried by the bird and becomes seriously ill. The illness leaves her with impaired balance and coordination, as well as an inability to concentrate. Which one of the following best describes how the workers compensation insurer for Angela's employer is likely to respond to a claim for Angela's illness?
Provide coverage because the majority of state statutes require coverage for occupational disease
The Workers Compensation and Employers Liability Policy (WC&EL policy) enables employers to satisfy their state workers compensation obligations by
Providing a means to pay benefits required by state work comp statutes
Workers compensation benefits include which one of the following?
Rehabilitation benefits
The workers compensation policies for some monopolistic fund states do not include employers liability coverage. Which one of the following should an employer purchase to address this coverage gap?
Stopgap coverage
Sue is injured at work, and her job responsibilities are curtailed for 30 days, after which time she is fully recovered. Sue has which one of the following types of workers compensation disabilities?
Temporary partial disability
Sue is injured at work, and her job responsibilities are limited for 30 days, after which time she fully resumes her duties. Which one of the following workers compensation disability classifications best describes Sue's injury?
Temporary partial disability
Which one of the following statements about provisions in Part One of the Workers Compensation and Employers Liability Insurance Policy is true?
The accident causing the injury must occur during the policy period
The workers compensation policy contains uniform provisions even though benefits vary by state. It is possible to use a single policy to provide varying benefits by state for which one of the following reasons?
The applicable work comp laws are incorporated by reference in the policy
Benefits provided by a workers compensation policy are paid based on which one of the following methods?
The benefits specified by the various state work comp laws listed in the policy Info Page
Which one of the following explains why the same "Workers Compensation and Employers Liability Insurance Policy" is able to be used in all states even though the provisions of the various state laws and the employee benefits have many differences?
The coverage provided by Part One obligates the insurer to pay all benefits required of the insured by the work comp law or occupational disease law of any state listed in Item #.A of the Info Page
The Voluntary Compensation and Employers Liability Coverage Endorsement provides for which one of the following if an employee entitled to payment under the endorsement brings a suit under the common law?
The coverage provided by the endorsement reverts to employers liability insurance
Which one of the following statements is correct with respect to experience rating of workers compensation insurance? Select one: A. The past period used in experience rating is usually the single year prior to policy inception. B. The experience rating computation produces an experience modification, or mod, which serves as a rate multiplier. C. In all states, the minimum annual premium required to qualify for experience rating is $50,000. D. The insured receives either a refund or a bill for an additional premium after the end of the period, depending on the losses during that period.
The experience rating computation produces an experience modification, or mod, which serves as a rate multiplier
Which one of the following does Part Two of the Workers Compensation and Employers Liability Policy require coverage with respect to covered injuries?
The injury must arise out of employment necessary or incidental to the insured's work in a state or territory listed in the policy
A state should be listed in Item 3.C of the Workers Compensation and Employers Liability Insurance Policy Information Page under which one of the following circumstances?
The insured expects operations might be extended to that state
Upsilon Incorporated is a furniture manufacturer. The company's management is casual about complying with health and safety regulations and the housekeeping and maintenance at the plant are poor. When a makeshift stairway at its plant collapses, two of Upsilon's employees are killed. Although the company is insured under a Workers Compensation and Employers Liability Insurance (WC&EL) Policy, the plant manager refuses to submit a loss report to Upsilon's insurer because he is concerned that the company's workers compensation premiums will increase. The deceased workers' dependents contact Upsilon's WC&EL insurer directly. Which one of the following best describes how the insurer should respond?
The insurer should pay applicable death benefits to the employee's dependents
Bill's Premium Packing (BPP) operates a fruit and vegetable canning operation. It purchases its produce from growers in three states in the Northeast. As a result, its operations are seasonal and during peak periods it depends on large numbers of casual laborers who are exempt from coverage under the applicable state workers compensation laws. Therefore, the company has purchased a Voluntary Compensation and Employers Liability Endorsement for its Workers Compensation and Employers Liability Insurance (WC&EL) Policy. When a casual laborer is badly injured on the job, the worker launches a lawsuit against BPP, alleging negligence. Which one of the following best describes how BPP's WC&EL insurer would respond?
The insurer would defend the insured against the employee's suit and pay any settlements awarded, subject to the stipulated limits of liability
Theta Logistics and Warehousing is insured under a Workers Compensation and Employers Liability Insurance Policy. Item 3.A of the policy's Information Page lists California. Item 3.C of the Information Page reads: "All states except those listed in Item 3.A. and ND, OH, WA, WV, and WY." On January 2, Theta takes possession of an empty warehouse that it has purchased in New Mexico. That same day, Theta sends a letter to its insurer advising of its newly expanded operations. On January 3, one of Theta's employees is injured on the job at the new location. On January 4, the insurer receives the letter. Which one of the following best describes how Theta's insurer would respond?
The insurer would pay benefits as outlined in the New Mexico state work comp law
Lambda International manufactures fertilizers. The company has a Workers Compensation and Employer's Liability Insurance Policy. The Information Page of the policy includes the following limits for employers liability insurance: Bodily Injury by Accident: $100,000 each accident Bodily Injury by Disease: $500,000 policy limit Bodily Injury by Disease: $100,000 each employee When an employee at Lambda's plant accidentally backs a forklift into a tank containing a caustic chemical, the tank ruptures and six employees are badly burned. Although all of the workers recover fully, each of the six requires $25,000 in medical treatment. Which one of the following best describes how Lambda's insurer would respond?
The insurer would pay the benefits required by the work comp law up to the limits found within the law itself
The determination of which state's law applies depends on the provisions of the laws in question and typical considerations include all of the following, EXCEPT: - The place and nature of employment - The place where the employee was interviewed for employment - The employee's place of residence - The state in which the employer is domiciled
The place where the employee was interviewed for employment
If a state is designated in Item 3.C of the Workers Compensation and Employers Liability Insurance Policy Information Page, and the insured begins operations in that state, the policy provides which one of the following?
The same coverage as if that state were listed in Item 3.A
Which one of the following would be covered in some states under Part Two of the Workers Compensation and Employers Liability Insurance Policy?
The spouse of an injured employee sues the employer for loss of companionship and services such as housekeeping and yard work resulting from the injury
A factory fire caused by an employer's negligence results in the death of one employee. The employee was the sole parent and caregiver of a disabled young adult. The young adult sues the employer for loss of services. Which one of the manufacturer's policies would respond to this suit?
The work comp and employers liability policy would respond as loss of services is considered under employers liability insurance
The Voluntary Compensation and Employers Liability Coverage Endorsement to a workers compensation policy is needed for which one of the following reasons?
The work comp laws of most states exempt some types of employment from statutory work comp benefits
When a worker is required to travel to another state and is injured in that other state, which one of the following is a typical consideration in determining which state's law applies for the purpose of determining workers compensation coverage?
The worker's place of residence
Which one of the following statements is correct with respect to large deductible plans for workers compensation insurance?
They allow the insured, in effect, to self-insure most of its work comp exposures
With regard to workers compensation, which one of the following statements about states with monopolistic state funds is true?
They do not allow private insurers to be licensed to write work comp coverage in that state
Before workers compensation statutes were enacted, what was the remedy for employees with work-related injuries?
They had to establish that the employer was at fault to recover damages
All of the following are exclusions that appear under the employers liability section of the workers compensation and employers liability policy, EXCEPT: - Punitive damages for injury or death of any illegally employed person - Bodily injury to employees employed in violation of the law with knowledge of the insured or any exec officers of the insured - Bodily injury intentionally caused by the insured - Third-party-over claims
Third-party-over claims
Why does an employer need employer's liability insurance in addition to workers compensation insurance and a commercial general liability (CGL) insurance policy?
To cover claims not covered by work comp statute
Which one of the following best describes the purpose of stop gap coverage when used with workers compensation insurance?
To cover employers in monopolistic fund states that do not include employers liability with their work comp policies
An employer should purchase stop gap coverage for which one of the following reasons?
To provide employers liability coverage in a state with a monopolistic state fund
Which one of the following statements is correct with respect to workers compensation premium adjustment through dividend plans? Select one: A. Under a sliding-scale dividend plan, the size of the dividend varies with the insured's own loss experience. B. Under a flat-dividend plan, all eligible policies receive the same dollar amount of dividend. C. Insurers that offer dividend plans generally make them available to marginal accounts as a loss control incentive. D. In order to offer a dividend plan, state regulation requires that the insurer guarantee the dividend will be paid annually.
Under a sliding-scale dividend plan, the size of the dividend varies with the insured's own loss experience
A federal workers compensation statute eliminates the right of most maritime workers (other than crew members of vessels) to sue their employers and in return requires such employers to provide injured or ill workers with benefits like those provided by state workers compensation statutes. The name of this statute is the
United State Longshore and Habor Workers' Comp Act (LHWCA)
If the insured has operations in a particular state on the effective date of the policy but that state is not listed in Item 3.A, what coverage is provided in that state?
Unless the info is reported to the insurer within 30 days, no coverage will apply for that state
An employer that decides to purchase specific excess insurance to cover catastrophic workers compensation losses must pay losses that are which one of the following?
Up to the retention for one occurrence
Green Parks employs three secretaries and accountants, five farm laborers, and one housekeeper. What endorsement would Green Parks likely add to its workers compensation policy to make sure all employees have coverage?
Voluntary compensation endorsement
Which one of the following statements is correct with respect to Part One of the Workers Compensation and Employers Liability Policy? Select one: A. An employer's failure to comply with health and safety laws and regulations results in immediate suspension of coverage. B. Dependents of a deceased employee have no right of action against the insurer. C. When the insurer pays benefits, any right of recovery against a third party becomes the right of the insurer. D. If the employer fails to comply with policy requirements, the insurer is not obliged to pay benefits.
When the insurer pays benefits, any right of recovery against a third party becomes the right of the insurer
Which one of the following statements is correct with regard to the United States Longshore and Harbor Workers Compensation Act (LHWCA)?
Work comp and LHWCA exposures must be covered and rated separately
