Chapter 9 Practice Questions

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? A. Experience rating B. Schedule rating C. Retrospective rating D. Premium discount rating

A. Experience rating

Which one of the following statements is true with respect to Part One of the Workers Compensation and Employers Liability Policy? A. It covers all operations of the employer except those otherwise insured or specifically excluded by endorsement. B. It covers the employer only for those locations and employees listed on the Information Page. C. It takes precedence if the policy and the applicable workers compensation law conflict. D. It defines important terms such as "workers compensation law", "we" and "you."

A. It covers all operations of the employer except those otherwise insured or specifically excluded by endorsement.

Which one of the following best describes the effect of the Voluntary Compensation and Employers Liability Endorsement? A. It obligates the insurer to pay an amount equal to the compensation benefits that would be payable if exempt employees were subject to the workers compensation law. B. It amends the standard Workers Compensation and Employers Liability Insurance Policy to make exempt employees subject to the workers compensation law. C. It modifies the employers liability coverage so the employer can make voluntary payments to injured workers, regardless of whether the employer was liable for the injury. D. It provides limited medical and rehabilitation benefits to exempt employees, which are less than the benefits payable to workers who qualify for workers compensation benefits.

A. It obligates the insurer to pay an amount equal to the compensation benefits that would be payable if exempt employees were subject to the workers compensation law.

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? A. It would not provide coverage because injuries occurring while traveling to or from work at a fixed location are generally not covered. B. It would provide coverage because the injury would not have occurred if Warren had not been on his way to work. C. It would provide coverage only if a Voluntary Compensation and Employers Liability Coverage Endorsement is attached to the policy. D. It would provide coverage because the injury was caused by Warren's fellow employee.

A. 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 statements is correct regarding the application of workers compensation laws in foreign countries? A. Only a few countries have workers compensation laws comparable to those found in the U.S. and Canada. B. Foreign workers compensation laws are virtually identical to U.S. Laws. C. Under most states' workers compensation laws, an employee temporarily working abroad has coverage limited to repatriation expenses and endemic illnesses only. D. Employees who are temporarily working outside the U.S. are not covered by the workers compensation law of the state where they regularly work.

A. Only a few countries have workers compensation laws comparable to those found in the U.S. and Canada.

Which one of the following statements about provisions in Part One of the Workers Compensation and Employers Liability Insurance Policy is true? A. The accident causing the injury must occur during the policy period. B. An employee retains any rights of recovery against a third party to the extent workers compensation benefits have been received. C. Obligations of the insurer are null and void if the employer fails to comply with policy requirements. D. Disease must manifest itself during the policy period.

A. The accident causing the injury must occur during the policy period.

Part Two of the Workers Compensation and Employers Liability Policy requires which one of the following with respect to covered injuries? A. The injury must arise out of employment necessary or incidental to the insured's work in a state or territory listed in the policy. B. The injury must arise out of and in the course of the worker's employment at one of the insured locations listed in the policy. C. The injury must occur in one of the states listed in the policy. D. The injury must not result from employer negligence.

A. The injury must arise out of employment necessary or incidental to the insured's work in a state or territory listed in the policy.

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? A. The insurer would defend the insured against the employee's suit and pay any settlement awarded, subject to the stipulated limits of liability. B. The insurer would issue a check to the worker for an amount equal to the value of the benefits he would have received if he had been eligible for workers compensation. C. The insurer would make no payment; by launching the suit, the injured worker has declined the voluntary benefits available under the endorsement. D. The insurer would consult with BPP to determine whether the insured wished to make voluntary payments under the employers liability portion of the endorsement.

A. The insurer would defend the insured against the employees' suit and pay any settlement awarded, subject to the stipulated limits of liability.

Which one of the following describes a coverage trigger applicable to Part Two—Employers Liability Insurance? A. For bodily injury by disease, the policy in effect on the employee's first initial exposure to the conditions causing the disease is the policy that applies. B. For bodily injury by accident, the policy that is in effect when the injury occurs is the policy that applies. C. For bodily injury by disease, the policy that is in effect on the first day that the employee exhibits symptoms of occupational disease is the policy that applies. D. For bodily injury by accident, the policy that is in effect when the employer receives notice of the employee's lawsuit is the policy that applies.

B. For bodily injury by accident, the policy that is in effect when the injury occurs is the policy that applies.

Which one of the following statements is correct with respect to large deductible workers compensation plans? A. The deductible applies on an annual aggregate basis to the total value of workers compensation claims during the year. B. It allows the insured to self-insure most of its workers compensation claims without establishing a qualifying self-insurance plan. C. These plans are available only in states with monopolistic state workers compensation funds. D. The employer does all the administrative work connected with workers compensation claims up to the deductible amount.

B. It allows the insured to self-insure most of its workers compensation claims without establishing a qualifying self-insurance plan.

Which one of the following statements is correct with respect to limits of liability applicable to Part Two—Employers Liability Insurance? A. The insurer has a duty to pay defense costs even after damages equaling the limit of insurance have been paid. B. It includes a bodily injury by disease policy limit. C. It includes a property damage by accident limit. D. Supplementary payments are covered within the stated limits of liability.

B. It includes a bodily injury by disease policy limit.

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? A. Injuries to MMC's full-time ship captains are likely to be covered under state workers compensation laws. B. Many states workers compensation statutes exclude casual labor (short-term employees). C. The independent contractors are automatically employees under common law. D. Temporary employees are considered employees of MMC rather than employees of the firm supplying them to MMC.

B. Many states workers compensation statutes exclude casual labor (short-term employees).

Which one of the following requirements must be met before an employer may operate a "qualified" self-insurance workers compensation plan? A. A small number of employees located in several states B. Posting a surety bond C. Purchase of excess insurance D. Rejection by private insurers

B. Posting a surety bond

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? A. The insurer is not licensed to write workers compensation in that state. B. The insured expects operations might be extended to that state. C. The state has a monopolistic workers compensation fund. D. The insured has operations in the state when the policy is written.

B. The insured expects operations might be extended to that state.

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 of the Workers Compensation and Employers Liability Insurance (WC&EL) Policy Information Page, which one of the following statements is true? A. Coverage under the WC&EL Policy is suspended due to nondisclosure of a material fact. B. The insured must notify the insurer within thirty days or else no coverage will apply for that state. C. The insured must immediately request the insurer to add other states insurance to the policy by endorsement. D. Part Three—Other States Insurance automatically extends coverage to those operations.

B. The insured most notify the insurer within thirty days or else no coverage will apply for that state.

The Voluntary Compensation and Employers Liability Coverage Endorsement to a workers compensation policy is needed for which one of the following reasons? A. An employer may wish to compensate employees for injury, illness or other damages immediately and regardless of fault so as to maintain goodwill and prevent lawsuits. B. The workers compensation laws of most states exempt some types of employment from statutory workers compensation benefits. C. An insured may want to pay benefits that are more generous than those specified in applicable state workers compensation legislation. D. An insured may wish to obtain workers compensation and employers liability coverage for employees of a third party, such as a subcontractor.

B. The workers compensation laws of most states exempt some types of employment from statutory workers compensation benefits.

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? A. Above the retained limit and up to the policy limits. B. Up to the retention for one occurrence. C. Up to an aggregate amount for the policy period. D. Above the amount covered by the monopolistic state fund.

B. Up to the retention for one occurrence.

Which one of the following statements is correct with respect to Part One of the Workers Compensation and Employers Liability Policy? A. Dependents of a deceased employee have no right of action against the insurer. B. If the employer fails to comply with policy requirements, the insurer is not obliged to pay benefits. C. When the insurer pays benefits, any right of recovery against a third party becomes the right of the insurer. D. An employer's failure to comply with health and safety laws and regulations results in immediate suspension of coverage.

C. 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)? A. An employer cannot be simultaneously subject to both the LHWCA and the state workers compensation law. B. Insurers are required by law to provide LHWCA coverage for insureds that request it. C. Workers compensation and LHWCA exposures must be covered and rated separately. D. The LHWCA coverage endorsement automatically extends coverage to the United States, its territories and possessions, and Canada.

C. Workers compensation and LHWCA exposures must be covered and rated separately.

To be covered under a workers compensation statute, an injury or disease (in most states) must meet which one of the following requirements? A. Occur away from the regular work premises B. Result from the employer's negligence C. Result in total disability D. Arise out of and in the course of the employment

D. Arise out of and in the course of the employment.

Which one of the following statements about Part One of the Workers Compensation and Employers Liability Policy is true? A. It does not provide for litigation costs. B. It does not provide for expenses for investigating claims. C. It shows dollar limits for benefits. D. It contains no exclusions.

D. It contains no exclusions.

Workers compensation benefits include which one of the following? A. Property damage benefits B. Death benefits of 100 percent of wage loss C. Pain and suffering benefits D. Rehabilitation benefits

D. Rehabilitation benefits

Before workers compensation statutes were enacted, what was the remedy for employees with work-related injuries? A. They received guaranteed payments. B. They were covered by no-fault protection. C. They had no right to sue their employers for compensation. D. They had to establish that the employer was at fault to recover damages.

D. They had to establish that the employer was at fault to recover damages.

Which one of the following best describes the purpose of stop gap coverage when used with workers compensation insurance? A. To provide 60 days automatic coverage when an employer expands its operations into a monopolistic fund state B. To cover employers in states without monopolistic funds C. To cover employers in states where their workers compensation insurer refuses to write coverage D. To cover employers in monopolistic fund states that do not include employers liability with their workers compensation policies

D. To cover employers in monopolistic fund states that do not include employers liability with their workers compensation policies.

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 A. Jones Act. B. United States Merchant Marine Act. C. Federal Employers' Liability Act. D. United States Longshore and Harbor Workers' Compensation Act (LHWCA).

D. United States Longshore and Harbor Workers' Compensation Act (LHWCA)