WORKERS COMPENSATION- GENERAL CONCEPTS

In order to be covered by the U.S. Longshore and Harbor Workers Compensation Act, a worker must meet the requirements of the A Situs and status test B Maritime and navigable waters test C Wharf and pier test D Loading and unloading test

A Situs and status test correct! A worker is covered under the LHWCA only if he or she meets a "situs and a status" test. The injury must occur on the navigable waters or on an adjoining wharf, pier, dock, or similar facility used in the loading, unloading, building, or repairing vessels. In addition, the individual must have been engaged in maritime employment when injured.

Crews of ships are covered by A The Jones Act. B U.S. Longshore and Harbor Workers Compensation Act. C States' workers compensation laws. D Federal Employers Liability Act.

A The Jones Act. correct! The Jones Act is a federal law that provides remedies to seamen who are injured while working on a vessel. It extends the provisions of FELA.

All of the following choices are legal methods for employers to finance their liability for Workers Compensation benefits in California EXCEPT A State insurance. B Employee insurance. C Self-insurance. D Private insurance.

B Employee insurance. correct! Self-insurance, private insurance and state insurance are all legal methods by which employers may finance their liability for Workers Compensation benefits. Coverage Provided California has a compulsory workers compensation law. Simply put, even if there is only one employee on a person's payroll, workers compensation benefits must be provided. All employers are required to obtain a workers compensation insurance policy unless they are large enough to demonstrate stable cash flow, in which case they may apply to the state Department of Industrial Relations (DIR) and, if qualified, be certified as self-insured for workers compensation. Most such employers are also required to post securities - a surety bond or other cash deposit which could be used to pay claims if the employer fails to do so - with the state for the privilege of being self-insured. As with any health insurance, employers may finance their liability for Workers Compensation benefits through state, private, or self insurance. An employer who fails to obtain the required insurance can have his or her business temporarily closed by a stop order of the Department of Industrial Relations. Additionally, the employer may be fined up to $10,000 for violating the stop order, in addition to $1,000 per employee and the possibility of being charged with insurance fraud because of failure to purchase workers compensation insurance. California has an uninsured employee fund for the purpose of handing the claims of uninsured workers. Temporary total disability benefit payments are usually two-thirds (66.67%) of the wages that the insured was earning before the injury. However, the insured cannot receive more than a maximum weekly amount set by law (currently $1,066.72 per week, but the dollar amounts increase annually to reflect growth in the state average weekly wage). For example, if the two-thirds of an employee's wages is the amount higher than the annual limit, the employee could receive less than two-thirds in workers completion disability benefit. On the other hand, low-wage workers are entitled to at least the minimum weekly benefit limit (currently $160 per week), if the two-thirds of their wages add up to a smaller amount. Medical claims are not limited in either dollar amount or duration, up to the lifetime of the worker. Workers compensation benefits are not subject to state or federal income taxes or social security withholding, nor are union dues or retirement fund contributions deducted from workers compensation income benefits. Workers Compensation vocational rehabilitation benefit (supplemental job displacement benefit - SJDB) includes any expenses related to providing treatment necessary to return the worker to full employment. SJDB is paid in the form on a nontransferable voucher that can be used to pay for educational retraining or skill enhancement at state-approved or state-accredited schools. The voucher covers tuition, fees, books and expenses. Up to 10% of the value of the voucher may be used for vocational and return-to-work counseling. The amount of voucher may vary from $4,000 to $10,000, depending on the permanent disability level. Due in large part to rising medical claims and fraud, premiums for workers compensation insurance are escalating rapidly. Premiums are based on occupational classifications, actual payroll, and actual claims experience. Employers pay the premiums and may be eligible for premium discounts if they offer regular safety training programs in the workplace. Because of the seriousness of the dramatic rise in premiums in the past few years, the Department of Insurance, insurers, and the state legislature are looking at ways to limit claims or benefits in order to stabilize premiums without adversely affecting claimants with legitimate injuries or illnesses.

States with monopolistic state workers compensation funds A Require all employers in their state to purchase workers compensation insurance regardless of their financial capacity. B Sell workers compensation insurance through private insurers that are in the state and receive a "kickback" for all policies sold on an annual basis. C Do not allow private insurers to be licensed to write workers compensation coverage D Provide workers compensation insurance through managed risk plans

C Do not allow private insurers to be licensed to write workers compensation coverage correct! Under the monopolistic state fund program, no private insurer is allowed to market competitive programs in the state. In such states, workers compensation is available to all employers, but employer's liability coverage may or may not be offered.

The Workers Compensation permanent disability benefit pays benefits for A Permanent partial disabilities only. B Neither permanent total nor permanent partial disabilities. C Permanent total disabilities and permanent partial disabilities. D Permanent total disabilities only.

C Permanent total disabilities and permanent partial disabilities. correct! The Workers Compensation permanent disability benefit pays for permanent total disabilities and permanent partial disabilities. Coverage Provided California has a compulsory workers compensation law. Simply put, even if there is only one employee on a person's payroll, workers compensation benefits must be provided. All employers are required to obtain a workers compensation insurance policy unless they are large enough to demonstrate stable cash flow, in which case they may apply to the state Department of Industrial Relations (DIR) and, if qualified, be certified as self-insured for workers compensation. Most such employers are also required to post securities - a surety bond or other cash deposit which could be used to pay claims if the employer fails to do so - with the state for the privilege of being self-insured. As with any health insurance, employers may finance their liability for Workers Compensation benefits through state, private, or self insurance. An employer who fails to obtain the required insurance can have his or her business temporarily closed by a stop order of the Department of Industrial Relations. Additionally, the employer may be fined up to $10,000 for violating the stop order, in addition to $1,000 per employee and the possibility of being charged with insurance fraud because of failure to purchase workers compensation insurance. California has an uninsured employee fund for the purpose of handing the claims of uninsured workers. Temporary total disability benefit payments are usually two-thirds (66.67%) of the wages that the insured was earning before the injury. However, the insured cannot receive more than a maximum weekly amount set by law (currently $1,066.72 per week, but the dollar amounts increase annually to reflect growth in the state average weekly wage). For example, if the two-thirds of an employee's wages is the amount higher than the annual limit, the employee could receive less than two-thirds in workers completion disability benefit. On the other hand, low-wage workers are entitled to at least the minimum weekly benefit limit (currently $160 per week), if the two-thirds of their wages add up to a smaller amount. Medical claims are not limited in either dollar amount or duration, up to the lifetime of the worker. Workers compensation benefits are not subject to state or federal income taxes or social security withholding, nor are union dues or retirement fund contributions deducted from workers compensation income benefits. Workers Compensation vocational rehabilitation benefit (supplemental job displacement benefit - SJDB) includes any expenses related to providing treatment necessary to return the worker to full employment. SJDB is paid in the form on a nontransferable voucher that can be used to pay for educational retraining or skill enhancement at state-approved or state-accredited schools. The voucher covers tuition, fees, books and expenses. Up to 10% of the value of the voucher may be used for vocational and return-to-work counseling. The amount of voucher may vary from $4,000 to $10,000, depending on the permanent disability level. Due in large part to rising medical claims and fraud, premiums for workers compensation insurance are escalating rapidly. Premiums are based on occupational classifications, actual payroll, and actual claims experience. Employers pay the premiums and may be eligible for premium discounts if they offer regular safety training programs in the workplace. Because of the seriousness of the dramatic rise in premiums in the past few years, the Department of Insurance, insurers, and the state legislature are looking at ways to limit claims or benefits in order to stabilize premiums without adversely affecting claimants with legitimate injuries or illnesses.

A premium discount is the term that describes when an insured owes a total standard premium greater than A $10,000. B $15,000. C $1,000. D $5,000.

D $5,000. correct! A premium discount is when an insured owes a total standard premium greater than $5,000.

The voluntary compensation endorsement provides statutory coverage for which types of employees? A Factory workers B Police officers C Teachers D Farmworkers

D Farmworkers Correct! This endorsement added to a workers compensation policy provides statutory coverage for employees who do not fall under a state's workers compensation act, such as farmworkers.

Employers liability insurance, Part Two of a standard WC&EL policy form, excludes A An intentional act that is caused by the insured. B Liability to a third party for claims arising out of injury to an employee. C Bodily injury caused by accident when the injury occurs during the policy period. D Bodily injury caused by or aggravated by disease during the policy period.

A An intentional act that is caused by the insured. Correct! The employer is NOT liable for damages cause by intentional acts (negligence) of the insured.

Workers compensation rating is developed by applying a rating bureau job classification rate to each A $500 of payroll. B $1,000 of payroll. C $100 of payroll. D $250 of payroll.

C $100 of payroll. Correct! Workers compensation rating is developed by applying a rating bureau job classification rate to each $100 of payroll.

Shipbuilders and repairers are covered by A States' workers compensation laws B Federal Employers Liability Act. C U.S. Longshore and Harbor Workers Compensation Act. D The Jones Act.

C U.S. Longshore and Harbor Workers Compensation Act. Correct! The U.S. Longshore and Harbor Workers Compensation Act is a federal law offering workers compensation benefits for workers who are injured on navigable water who are normally not covered by state workers compensation laws.

An employer is on the verge of bankruptcy. To save money, the employer decides to cancel its workers compensation plan. Which of the following is true? A The business is not required to maintain workers compensation insurance, provided that the employees are notified 90 days before policy cancellation. B If the business meets the state's definition of small employer, then workers compensation is coverage is not necessary anyway. C This business may be closed under a cease and desist order issued by the Department of Industrial Relations. D Assuming that the business really is on the verge of bankruptcy, it could appeal to the State Insurance Department for exempt status.

C This business may be closed under a cease and desist order issued by the Department of Industrial Relations. Correct! All employers must obtain workers compensation insurance. Failure to do so may result in a cease and desist order from the Department of Industrial Relations. California State Compensation Insurance Fund In California, the state operates the State Compensation Insurance Fund (State Fund or SCIF), but there is also open competition for workers compensation insurance among a number of commercial insurers. The SCIF is now expected to be the insurer of last resort. Large employers that have the financial ability to pay premiums are being turned away or even requested to withdraw from SCIF, unless they can show that they are unable to obtain coverage in the commercial marketplace. Priority is now being given to smaller employers with more limited payrolls, regardless of whether they have sought coverage in the open market. The SCIF's Board of Directors establishes the rates charged by the Fund for the insurance it issues. These rates must be fixed within each class of business taking into consideration occupational hazards and in accordance with the elements listed below: Bodily risk or safety, premises or work hazard for each insured employer; The manner in which the work is conducted; A reasonable regard for the accident experience of each insured; A reasonable regard for the means and methods of caring for injured persons by each insured. Note, however, that the rates shall not take into account the extent to which the employees have or do not have persons dependent upon them for support. Very small employers are no longer required to prove that at least three insurers have declined them for coverage. Also, certain employers are regulated under the U.S. Longshoremens and Harbor Workers Compensation Act rather than state workers compensation laws, and they may also obtain that coverage from SCIF as well as from commercial insurers. Employers that are not eligible to be self-insured must obtain the insurance. An employer who fails to obtain the insurance is subject to having its business closed under a cease and desist order issued by the Department of Industrial Relations, which stays in effect until the insurance is obtained. The California Insurance Guarantee Association is prepared to pay claims of insolvent insurers, but there are only limited resources available to employees who should have been covered by the insurance and were not. An employer will be held personally liable for such claims.

Connor, an employee for Marble Tile, Inc., is injured outside of his home state. How will the workers compensation benefits be determined? A Benefits will be provided if the state was listed on the policy information page. B The legal system will determine which state's benefits apply to this particular loss. C The state's benefits that pay the lowest amount will be selected by the insurance company. D Connor may elect to receive benefits from both the home state and the state in which the injury occurred.

A Benefits will be provided if the state was listed on the policy information page. Correct! Employers must list all states in which they do business on the policy information page for coverage to apply in those states.

If an employer in a state with elective workers compensation laws chooses not be to subject to the state's workers compensation laws, what does the employer lose? A Its common law defenses against liability suits B Its ability to provide group health insurance C Its right to hire persons with disabilities D None of these

A Its common law defenses against liability suits Correct! Elective law means the employer does not have to be subject to the state's workers compensation laws, but if the employer chooses not to be subject to the laws, it loses its common law defenses against liability suits. Review ContentNext Question

Workers compensation benefits are provided for an employee injury or death that arises out of the course of normal employment in all of the following situations EXCEPT A On his evening stroll, an employee of an advertising company is injured while watching a competitor's billboard sign being removed from an advertising site. B An employee who delivers overnight packages is injured while voluntarily running the "package race" at the mandatory company picnic. C An employee suffers an injury while working at a jobsite. D An employee working as an over-the-road truck driver suffers injury while loading freight at a vendor's dock.

A On his evening stroll, an employee of an advertising company is injured while watching a competitor's billboard sign being removed from an advertising site. correct! Workers compensation provides coverage for injuries that occur in the course of normal employment, activities that add to the employer's goodwill and interests, and activities that an employee normally would engage in during the course of employment. The employer is liable for compensation for injuries that occur during employer-sponsored off-duty activities.

Employers liability insurance, Part Two of a standard WC&EL policy form, excludes A Bodily injury caused by or aggravated by disease during the policy period. B An intentional act that is caused by the insured. C Liability to a third party for claims arising out of injury to an employee. D Bodily injury caused by accident when the injury occurs during the policy period.

B An intentional act that is caused by the insured. Correct! The employer is NOT liable for damages cause by intentional acts (negligence) of the insured.

All of the following statements are true regarding workers compensation insurance in California EXCEPT A Workers compensation can be funded by self insurance. B Companies with fewer than 5 employees are not required to have workers compensation. C The Department of Industrial Relations can place a stop order on a business operating without workers compensation insurance. D Workers compensation is compulsory.

B Companies with fewer than 5 employees are not required to have workers compensation. Correct! California has a compulsory workers compensation law. Simply put, even if there is only one employee on a person's payroll, workers compensation benefits must be provided. Coverage Provided California has a compulsory workers compensation law. Simply put, even if there is only one employee on a person's payroll, workers compensation benefits must be provided. All employers are required to obtain a workers compensation insurance policy unless they are large enough to demonstrate stable cash flow, in which case they may apply to the state Department of Industrial Relations (DIR) and, if qualified, be certified as self-insured for workers compensation. Most such employers are also required to post securities - a surety bond or other cash deposit which could be used to pay claims if the employer fails to do so - with the state for the privilege of being self-insured. As with any health insurance, employers may finance their liability for Workers Compensation benefits through state, private, or self insurance. An employer who fails to obtain the required insurance can have his or her business temporarily closed by a stop order of the Department of Industrial Relations. Additionally, the employer may be fined up to $10,000 for violating the stop order, in addition to $1,000 per employee and the possibility of being charged with insurance fraud because of failure to purchase workers compensation insurance. California has an uninsured employee fund for the purpose of handing the claims of uninsured workers. Temporary total disability benefit payments are usually two-thirds (66.67%) of the wages that the insured was earning before the injury. However, the insured cannot receive more than a maximum weekly amount set by law (currently $1,066.72 per week, but the dollar amounts increase annually to reflect growth in the state average weekly wage). For example, if the two-thirds of an employee's wages is the amount higher than the annual limit, the employee could receive less than two-thirds in workers completion disability benefit. On the other hand, low-wage workers are entitled to at least the minimum weekly benefit limit (currently $160 per week), if the two-thirds of their wages add up to a smaller amount. Medical claims are not limited in either dollar amount or duration, up to the lifetime of the worker. Workers compensation benefits are not subject to state or federal income taxes or social security withholding, nor are union dues or retirement fund contributions deducted from workers compensation income benefits. Workers Compensation vocational rehabilitation benefit (supplemental job displacement benefit - SJDB) includes any expenses related to providing treatment necessary to return the worker to full employment. SJDB is paid in the form on a nontransferable voucher that can be used to pay for educational retraining or skill enhancement at state-approved or state-accredited schools. The voucher covers tuition, fees, books and expenses. Up to 10% of the value of the voucher may be used for vocational and return-to-work counseling. The amount of voucher may vary from $4,000 to $10,000, depending on the permanent disability level. Due in large part to rising medical claims and fraud, premiums for workers compensation insurance are escalating rapidly. Premiums are based on occupational classifications, actual payroll, and actual claims experience. Employers pay the premiums and may be eligible for premium discounts if they offer regular safety training programs in the workplace. Because of the seriousness of the dramatic rise in premiums in the past few years, the Department of Insurance, insurers, and the state legislature are looking at ways to limit claims or benefits in order to stabilize premiums without adversely affecting claimants with legitimate injuries or illnesses.

What method of premium computation relates an employer's losses, payroll, and premiums to the rating bureau's classifications of operations? A Arbitration plan B Experience modification factor C Workers classification factor D Merit rating plan

B Experience modification factor correct! An experience modification factor is developed by a rating bureau. The calculations relate an employer's losses, payroll, and premiums, segregated according to classifications of operations, all as reported to the bureau by the employer's insurance company. Experience modification factor is developed by a rating bureau. The calculations relate an employer's losses, payroll, and premiums, segregated according to classifications of operations, all as reported to the bureau by the employer's insurance company.

An employer that qualifies for a self-insured workers compensation plan may wish to further limit his liability against catastrophic losses by purchasing excess insurance coverage called A Self-insurance liability coverage. B Extreme liability coverage. C Aggregate excess coverage. D Catastrophic excess coverage.

C Aggregate excess coverage. correct! Aggregate excess coverage covers liabilities above the employers "retention requirement" up to a predetermined loss limit.

What method of premium computation relates an employer's losses, payroll, and premiums to the rating bureau's classifications of operations? A Experience modification factor B Workers classification factor C Merit rating plan D Arbitration plan

A Experience modification factor Correct! An experience modification factor is developed by a rating bureau. The calculations relate an employer's losses, payroll, and premiums, segregated according to classifications of operations, all as reported to the bureau by the employer's insurance company.

Connor, an employee for Marble Tile, Inc., is injured outside of his home state. How will the workers compensation benefits be determined? A Benefits will be provided if the state was listed on the policy information page. B The legal system will determine which state's benefits apply to this particular loss. C The state's benefits that pay the lowest amount will be selected by the insurance company. D Connor may elect to receive benefits from both the home state and the state in which the injury occurred.

A Benefits will be provided if the state was listed on the policy information page. correct! Employers must list all states in which they do business on the policy information page for coverage to apply in those states. Part Three - Other States Insurance Other states insurance coverage extends an insured's coverage for new or incidental operations in other states (excluding the monopolistic states) on an automatic and temporary basis, subject to certain conditions and time limits. The state in which a temporary or new operation exists must be listed in the 3C part of the information page. It is common for this section to list or describe all states other than monopolistic states. This offers the insured the greatest protection for incidental or new exposures. If the state is not listed, no coverage applies. A critical component to this coverage is when the work began. If it is after the effective date of the policy and the insured has made no other arrangements for coverage (self-insurance), then coverage applies as if the state were listed in 3A - mandatory coverage. However, if work is underway on the effective date, coverage will only apply if the insurer is notified within 30 days. For example, an insured has a calendar year policy and begins work in June in a new state. The state in which work is conducted is not listed in 3A of the information page. As long as this state is listed in 3C, coverage will apply as if it were listed in 3A. In policy period 2 of the following year, the insured's work continues. An injury occurs in March of the second policy term. The insured, in order to have coverage, would have had to notify the insurer by the end of January of policy period 2. If they did, the state would be listed in 3A, and coverage would apply. If the insured did not notify the insurer there would be no coverage even if the state continued to be listed in 3C. Injuries that occur in states in which the employer and employee do not reside can get complicated. It is easier to think of work performed when completed by employees who live and work in a particular state, even if the employer's headquarters is not in that state. End Quiz Chapter Quiz -Question 12 of 12 Chapter: Workers Compensation - General Concepts Connor, an employee for Marble Tile, Inc., is injured outside of his home state. How will the workers compensation benefits be determined? ABenefits will be provided if the state was listed on the policy information page. BThe legal system will determine which state's benefits apply to this particular loss. CThe state's benefits that pay the lowest amount will be selected by the insurance company. DConnor may elect to receive benefits from both the home state and the state in which the injury occurred. Incorrect! Employers must list all states in which they do business on the policy information page for coverage to apply in those states. Review ContentNext Question

Which of the following is a true statement regarding who is responsible for paying the premium for Workers Compensation coverage? A The employer is responsible for paying the entire premium. B It is the employer's responsibility to collect the money through payroll deductions and to forward the premium to the insurance company promptly. C Workers Compensation is a contributory plan, meaning that the employer and employees share in the costs of the premium. D Since coverage is mandatory, it is provided at no cost to the employer, and no premiums are charged.

A The employer is responsible for paying the entire premium. Correct! The employer must pay the entire cost of the premium for Workers Compensation coverage.

Which of the following is a true statement regarding who is responsible for paying the premium for Workers Compensation coverage? A The employer is responsible for paying the entire premium. B It is the employer's responsibility to collect the money through payroll deductions and to forward the premium to the insurance company promptly. C Workers Compensation is a contributory plan, meaning that the employer and employees share in the costs of the premium. D Since coverage is mandatory, it is provided at no cost to the employer, and no premiums are charged.

A The employer is responsible for paying the entire premium. correct! The employer must pay the entire cost of the premium for Workers Compensation coverage. Coverage Provided California has a compulsory workers compensation law. Simply put, even if there is only one employee on a person's payroll, workers compensation benefits must be provided. All employers are required to obtain a workers compensation insurance policy unless they are large enough to demonstrate stable cash flow, in which case they may apply to the state Department of Industrial Relations (DIR) and, if qualified, be certified as self-insured for workers compensation. Most such employers are also required to post securities - a surety bond or other cash deposit which could be used to pay claims if the employer fails to do so - with the state for the privilege of being self-insured. As with any health insurance, employers may finance their liability for Workers Compensation benefits through state, private, or self insurance. An employer who fails to obtain the required insurance can have his or her business temporarily closed by a stop order of the Department of Industrial Relations. Additionally, the employer may be fined up to $10,000 for violating the stop order, in addition to $1,000 per employee and the possibility of being charged with insurance fraud because of failure to purchase workers compensation insurance. California has an uninsured employee fund for the purpose of handing the claims of uninsured workers. Temporary total disability benefit payments are usually two-thirds (66.67%) of the wages that the insured was earning before the injury. However, the insured cannot receive more than a maximum weekly amount set by law (currently $1,066.72 per week, but the dollar amounts increase annually to reflect growth in the state average weekly wage). For example, if the two-thirds of an employee's wages is the amount higher than the annual limit, the employee could receive less than two-thirds in workers completion disability benefit. On the other hand, low-wage workers are entitled to at least the minimum weekly benefit limit (currently $160 per week), if the two-thirds of their wages add up to a smaller amount. Medical claims are not limited in either dollar amount or duration, up to the lifetime of the worker. Workers compensation benefits are not subject to state or federal income taxes or social security withholding, nor are union dues or retirement fund contributions deducted from workers compensation income benefits. Workers Compensation vocational rehabilitation benefit (supplemental job displacement benefit - SJDB) includes any expenses related to providing treatment necessary to return the worker to full employment. SJDB is paid in the form on a nontransferable voucher that can be used to pay for educational retraining or skill enhancement at state-approved or state-accredited schools. The voucher covers tuition, fees, books and expenses. Up to 10% of the value of the voucher may be used for vocational and return-to-work counseling. The amount of voucher may vary from $4,000 to $10,000, depending on the permanent disability level. Due in large part to rising medical claims and fraud, premiums for workers compensation insurance are escalating rapidly. Premiums are based on occupational classifications, actual payroll, and actual claims experience. Employers pay the premiums and may be eligible for premium discounts if they offer regular safety training programs in the workplace. Because of the seriousness of the dramatic rise in premiums in the past few years, the Department of Insurance, insurers, and the state legislature are looking at ways to limit claims or benefits in order to stabilize premiums without adversely affecting claimants with legitimate injuries or illnesses. End Quiz Chapter Quiz -Question 5 of 12 Chapter: Workers Compensation - General Concepts Which of the following is a true statement regarding who is responsible for paying the premium for Workers Compensation coverage? AThe employer is responsible for paying the entire premium. BIt is the employer's responsibility to collect the money through payroll deductions and to forward the premium to the insurance company promptly. CWorkers Compensation is a contributory plan, meaning that the employer and employees share in the costs of the premium. DSince coverage is mandatory, it is provided at no cost to the employer, and no premiums are charged. Incorrect! The employer must pay the entire cost of the premium for Workers Compensation coverage. Review ContentNext Question

Which statement is true regarding Workers Compensation law in California? A Injured workers may always sue an employer for negligence regardless of the degree of fault against the employer. B Injured workers cannot sue an employer for negligence. C Injured workers may sue an employer for negligence when any degree of fault is established against the employer. D Injured workers may sue an employer for negligence only when fault is clearly established against the employer.

B Injured workers cannot sue an employer for negligence. correct! Workers Compensation law automatically holds the employer liable for on-the-job injuries. As long as the injury indeed was one "arising out of and in the course of the worker's employment," the injured worker is entitled to benefits. There is no need, therefore, to determine degree of fault or negligence.

Under the Workers Compensation Reform Act, the Commissioner sets recommended, nonmandatory premium rates and then allows individual companies to add administrative overhead and expense costs which result in a final rate plan. This type of rating method is known as A Reform rating plan. B Open rating plan. C Closed rating plan. D Nonmandatory rate plan.

B Open rating plan. Correct! Under the open rating plan, the Commissioner sets recommended, nonmandatory pure premium rates that are expected to cover the costs of benefits and loss adjustment expenses. Other administrative overhead and expenses are to be added by individual companies resulting in a final rate plan that utilizes market competition to keep premiums rates low. Review ContentNext Question

Which of the following would be covered under the workers compensation rehabilitation benefits? A 100% survivors' benefits B Rehabilitation-related travel and living expenses C Injury caused by intoxication while at work D Income replacement

B Rehabilitation-related travel and living expenses C Injury caused by intoxication while at work Correct! Workers Compensation will pay any expenses necessary to make it possible for an injured worker to receive rehabilitation. Income replacement is provided by Workers Comp but not under rehabilitation benefits.

Which of the following is INCORRECT in regard to the conditions found in a workers compensation policy? A The first named insured will act on behalf of all insureds under the policy. B The insurer may inspect the workplace after giving the insured 5 days' notice. C If the policy period is longer than 1 year and 16 days, all policy provisions will apply as though a new policy was issued on each annual anniversary date. D The insured's right and duties may not be transferred to anyone else without the insurer's written consent.

B The insurer may inspect the workplace after giving the insured 5 days' notice. correct! The insurer has the right to inspect the workplace at any time without giving notice.

Workers compensation rating is developed by applying a rating bureau job classification rate to each A $500 of payroll. B $1,000 of payroll. C $100 of payroll. D $250 of payroll.

C $100 of payroll. correct! Workers compensation rating is developed by applying a rating bureau job classification rate to each $100 of payroll. Job Classification - Payroll and Rates Workers compensation rating is developed by applying a rating bureau job classification rate to each $100 of payroll. Estimated payroll figures are used when a policy is issued, and the final premium is determined by an audit. Payroll means remuneration. It includes salaries, wages, commissions, bonuses, noncash compensation, vacation pay, and sick leave pay.

A premium discount is the term that describes when an insured owes a total standard premium greater than A $15,000. B $1,000. C $5,000. D $10,000.

C $5,000. Correct! A premium discount is when an insured owes a total standard premium greater than $5,000.

Workers compensation statutes provide coverage for diseases that occur as a result of working in the employer's working environment. Which of the following is an example of a disease that would NOT be covered by such provisions? A An employee of municipal fire department who suffers from smoke inhalation B An employee of a data-processing company who suffers from carpel tunnel syndrome C An employee of a medical facility who suffers from a common cold D An employee of a chemical plant who suffers from cancerous tumors

C An employee of a medical facility who suffers from a common cold correct! Although a cold could have been caught as a result of the working environment, it is not specific enough to that environment for it to be considered causal.

According to the conditions of a workers compensation policy, the insurer has the right to inspect the insured workplace A With the consent of the insured. B With at least 5 days' notice. C At any time. D With at least 10 days' notice.

C At any time. Correct! The insurer has the right to inspect the insured workplace at any time.

Which of the following is NOT a duty of the employer/insured if an injury occurs at the workplace? A Notify the insurer at once B Provide the name and address of the injured worker and any witnesses to the injury C Make voluntary payments for treatment of the worker's injury D Provide immediate medical care required by the law

C Make voluntary payments for treatment of the worker's injury Correct! The insured's duties are to: notify the insurer at once, provide immediate medical care required by the law, provide the names and addresses of the injured worker and any witnesses, promptly send any notices or other legal papers, cooperate with the insurer, do not make any voluntary payments or assume any obligations.

Which of the following is NOT a duty of the employer/insured if an injury occurs at the workplace? A Provide immediate medical care required by the law B Notify the insurer at once C Provide the name and address of the injured worker and any witnesses to the injury D Make voluntary payments for treatment of the worker's injury

D Make voluntary payments for treatment of the worker's injury Correct! The insured's duties are to: notify the insurer at once, provide immediate medical care required by the law, provide the names and addresses of the injured worker and any witnesses, promptly send any notices or other legal papers, cooperate with the insurer, do not make any voluntary payments or assume any obligations. Review ContentNext Question

What is the purpose of California's State Compensation Insurance Fund (SCIF)? A To make workers compensation insurance available, especially to smaller companies with more limited payrolls B To provide income replacement for California residents who are temporarily or permanently disabled C To pay claims on behalf of insurers that are unable to pay claims due to insolvency D To provide insurance to people who would be financially unable to obtain it otherwise

A To make workers compensation insurance available, especially to smaller companies with more limited payrolls correct! California's State Compensation Insurance Fund (SCIF) provides workers compensation insurance. However, commercial insurers may also provide this insurance. The State's plan is typically utilized only if a company cannot otherwise obtain the coverage in the commercial market. So, SCIF typically works with small employers with limited payrolls, as opposed to large corporations. Review ContentNext Question

Connor, an employee for Marble Tile, Inc., is injured outside of his home state. How will the workers compensation benefits be determined? A Benefits will be provided if the state was listed on the policy information page. B The legal system will determine which state's benefits apply to this particular loss. C The state's benefits that pay the lowest amount will be selected by the insurance company. D Connor may elect to receive benefits from both the home state and the state in which the injury occurred.

A Benefits will be provided if the state was listed on the policy information page. correct! Employers must list all states in which they do business on the policy information page for coverage to apply in those states.

Under the workers compensation system, who is responsible for the expenses resulting from work-related injuries and occupational diseases? A The employer, but only if it was at fault for the injury or disease B The employee and employer in equal shares C The employee D The employer, regardless of whether it was at fault for the injury or disease

D The employer, regardless of whether it was at fault for the injury or disease correct! Employers are required to purchase workers compensation policies. Part One pays for work-related injuries to employees without regard for negligence. Review ContentNext Question

Which of the following is INCORRECT in regard to the conditions found in a workers compensation policy? AThe first named insured will act on behalf of all insureds under the policy. BThe insurer may inspect the workplace after giving the insured 5 days' notice. CIf the policy period is longer than 1 year and 16 days, all policy provisions will apply as though a new policy was issued on each annual anniversary date. DThe insured's right and duties may not be transferred to anyone else without the insurer's written consent.

correct! The insurer has the right to inspect the workplace at any time without giving notice.

Employers liability insurance, Part Two of a standard WC&EL policy form, excludes A An intentional act that is caused by the insured. B Liability to a third party for claims arising out of injury to an employee. C Bodily injury caused by accident when the injury occurs during the policy period. D Bodily injury caused by or aggravated by disease during the policy period.

A An intentional act that is caused by the insured. correct! The employer is NOT liable for damages cause by intentional acts (negligence) of the insured. Part Two - Employers Liability Insurance Employers liability insurance coverage protects the insured from situations not covered under a state's workers compensation law. Unlike the workers compensation coverage part, which does not specifically show the statutory limits provided, employers liability limits are shown on the information page. The basic limits provided are $100,000 for bodily injury per accident; $100,000 per employee for disease; and $500,000 policy limit for disease (for all disease claims within the policy term). Most insurers allow the insured to purchase higher employers liability limits for an additional premium. In some states, these limits do not apply. Besides the basic coverage, this section also provides supplemental coverage, which is similar to that found in other policies. Coverage is provided for the employer's liability associated with bodily injury by accident or occupational disease and includes resulting death, and is triggered if: Injury arises from employment by the insured; Occurs in a state or territory listed in 3.A. of the information page; Occurs during the policy period; and If suit is brought in the USA or its territories, possessions, or Canada. There are several exclusions that apply to employers liability coverage: Liability assumed under a contract; Punitive or exemplary damages; Employees knowingly employed in violation of law; Injury intentionally caused by the insured; Injuries that occur outside the United States, its possessions, or Canada (injuries to a resident temporarily outside these areas are covered); Damages caused by the employment practices or policies of the insured, including defamation, harassment, humiliation, discrimination, or termination of any employee; Employees who are subject to federal workers compensation or employers liability laws (although coverage is usually available by endorsement); Fines or penalties imposed because of a violation of state or federal laws; and Damages payable under the Migrant and Seasonal Agricultural Worker Protection Act or similar laws. The other insurance clause states that losses will be paid on a contribution by equal shares basis. The limit of liability provision explains that the limits on the information page for bodily injury by accident apply per accident, and bodily injury by disease applies per person subject to the bodily injury by disease policy limit for all losses during the policy term. The final 2 provisions refer to the insurer's subrogation rights and actions against the insurer.

Which federal act provides benefits to injured civilians who are employed by the federal government? A Federal Employees Compensation Act B Federal Employers Liability Act (FELA) C Jones Act D U.S. Longshore and Harbor Workers Compensation Act

A Federal Employees Compensation Act Correct! The Federal Employees Compensation Act provides benefits to injured civilians who are employed by the federal government - no private insurers are involved.

Which statement is true regarding Workers Compensation law in California? A Injured workers cannot sue an employer for negligence. B Injured workers may sue an employer for negligence when any degree of fault is established against the employer. C Injured workers may sue an employer for negligence only when fault is clearly established against the employer. D Injured workers may always sue an employer for negligence regardless of the degree of fault against the employer.

A Injured workers cannot sue an employer for negligence. correct! Workers Compensation law automatically holds the employer liable for on-the-job injuries. As long as the injury indeed was one "arising out of and in the course of the worker's employment," the injured worker is entitled to benefits. There is no need, therefore, to determine degree of fault or negligence. Review ContentNext Question

If an employer in a state with elective workers compensation laws chooses not be to subject to the state's workers compensation laws, what does the employer lose? A Its common law defenses against liability suits B Its ability to provide group health insurance C Its right to hire persons with disabilities D None of these

A Its common law defenses against liability suits Correct! Elective law means the employer does not have to be subject to the state's workers compensation laws, but if the employer chooses not to be subject to the laws, it loses its common law defenses against liability suits. Compulsory vs. Elective The workers compensation laws vary from state to state. Most states have compulsory laws, which require all employers, except those specifically excluded due to staff size or employment type, to provide workers compensation coverage for those meeting the definition of employee. The remaining few states have elective laws, which means the employer does not have to be subject to the state's workers compensation laws, but if an employer chooses not to be subject to the state's laws, it loses its common law defenses against liability suits.

Workers compensation benefits are provided for an employee injury or death that arises out of the course of normal employment in all of the following situations EXCEPT A On his evening stroll, an employee of an advertising company is injured while watching a competitor's billboard sign being removed from an advertising site. B An employee who delivers overnight packages is injured while voluntarily running the "package race" at the mandatory company picnic. C An employee suffers an injury while working at a jobsite. D An employee working as an over-the-road truck driver suffers injury while loading freight at a vendor's dock.

A On his evening stroll, an employee of an advertising company is injured while watching a competitor's billboard sign being removed from an advertising site. Correct! Workers compensation provides coverage for injuries that occur in the course of normal employment, activities that add to the employer's goodwill and interests, and activities that an employee normally would engage in during the course of employment. The employer is liable for compensation for injuries that occur during employer-sponsored off-duty activities.

In order to be covered by the U.S. Longshore and Harbor Workers Compensation Act, a worker must meet the requirements of the A Situs and status test B Maritime and navigable waters test C Wharf and pier test D Loading and unloading test

A Situs and status test correct! A worker is covered under the LHWCA only if he or she meets a "situs and a status" test. The injury must occur on the navigable waters or on an adjoining wharf, pier, dock, or similar facility used in the loading, unloading, building, or repairing vessels. In addition, the individual must have been engaged in maritime employment when injured. U.S. Longshore and Harbor Workers Compensation Act Persons (other than seamen) who are engaged in maritime employment are covered under a federal workers compensation statute, the U.S. Longshore and Harbor Workers Compensation Act (LHWCA). A worker is covered under the LHWCA only if he or she meets a situs and a status test. The injury must occur on the navigable waters or on an adjoining wharf, pier, dock, or similar facility used in the loading, unloading, building, or repairing vessels. In addition, the individual must have been engaged in maritime employment when injured. When coverage is required for LHWCA, it may be added to a workers compensation policy by endorsement. The Longshore and Harbor Workers Compensation Act, and its extensions, provide medical benefits, compensation for lost wages, and rehabilitation services to employees who are injured during the course of employment, or contract an occupational disease related to employment. Survivor benefits also are provided if the work-related injury causes the employee's death.

A plant worker for a chemicals manufacturer was recently diagnosed with a rare blood disease. She told her doctor that her job required her to handle industrial waste chemicals. Which of the following types of injuries is covered under the workers compensation policy? A Occupational disease that occurs during lunch at a local restaurant B Injury that occurs traveling to and from work C Occupational disease caused or aggravated by a condition of employment D Injury willfully caused by the employee

C Occupational disease caused or aggravated by a condition of employment Correct! Occupational disease, like bodily injury, that arises out of or during employment is covered under workers compensation insurance.

Workers compensation statutes provide coverage for diseases that occur as a result of working in the employer's working environment. Which of the following is an example of a disease that would NOT be covered by such provisions? A An employee of a chemical plant who suffers from cancerous tumors B An employee of municipal fire department who suffers from smoke inhalation C An employee of a data-processing company who suffers from carpel tunnel syndrome D An employee of a medical facility who suffers from a common cold

D An employee of a medical facility who suffers from a common cold Correct! Although a cold could have been caught as a result of the working environment, it is not specific enough to that environment for it to be considered causal. Review ContentNext Question

Which federal act provides benefits to injured civilians who are employed by the federal government? A Federal Employers Liability Act (FELA) B Jones Act C U.S. Longshore and Harbor Workers Compensation Act D Federal Employees Compensation Act

D Federal Employees Compensation Act correct! The Federal Employees Compensation Act provides benefits to injured civilians who are employed by the federal government - no private insurers are involved.

Workers compensation laws provide all of the following types of benefits EXCEPT A Death benefits. B Compensatory benefits. C Medical benefits. D Rehabilitation benefits.

B Compensatory benefits. Correct! Award for pain and suffering is not compensated under workers compensation. Part One - Workers Compensation Insurance Workers compensation coverage, which applies to accidental bodily injury, death, or occupational disease, provides coverage for the statutory benefits required under the state's workers compensation laws. The actual benefits provided are not included, only a reference to the individual state's law. The policy also states that the insured is responsible for any benefits over those required by law that may be required due to the insured's willful misconduct or violation of safety or employment laws. Supplemental payments also are included and are similar to those found in other types of insurance policies. They include the following: Defense costs; Expenses incurred at the insurer's request; Premiums for certain bonds; Litigation costs; Interest on judgments required by law until the insurer offers a settlement; and All expenses the insurer incurs. The workers compensation section also contains the other insurance clause. It states that the insurer will pay equal shares in the event there is other insurance, including self-insurance, that can also respond to the loss. End Quiz Chapter Quiz -Question 11 of 12 Chapter: Workers Compensation - General Concepts Workers compensation laws provide all of the following types of benefits EXCEPT ADeath benefits. BCompensatory benefits. CMedical benefits. DRehabilitation benefits. Correct! Award for pain and suffering is not compensated under workers compensation. Review ContentNext Question

If the premium charged for a particular 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 a(n) A Retrospective rating plan. B Experience rating plan. C Judgment rating plan. D Manual rating plan.

B Experience rating plan. correct! An experience rating plan adjusts the premiums charges based on the claims history, positive or negative, of the individual insured. Part Five - Premium The premium section explains how premiums are determined, what the requirements are for insured record retention, and what rights the insurer has in auditing the insured's books and records. Premiums are determined by classification. Classifications are not industry specific in most cases, but instead are for job types, such as inside sales, outside sales, clerical, executive, and many others. Each classification will have a corresponding rate associated with it. The higher the hazard, the higher the rate. These rates are determined by the insurer and often require approval by state insurance departments. Remuneration, often just referred to as payroll, is another component in determining premiums. Remuneration includes payroll and other methods of compensation. The insured is required to keep records on all remuneration to employees so the final premium can be determined. The rate per job classification is charge per each $100 of the annual payroll of each occupational classification. Because the insured cannot know the final payroll until the end of the policy period, the initial premium is considered a deposit and is subject to adjustment at the end of the term. This takes place during the premium audit, which can be conducted during regular business hours during the policy period and up to 3 years after the policy expires. End Quiz Chapter Quiz -Question 10 of 12 Chapter: Workers Compensation - General Concepts If the premium charged for a particular 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 a(n) ARetrospective rating plan. BExperience rating plan. CJudgment rating plan. DManual rating plan. Incorrect! An experience rating plan adjusts the premiums charges based on the claims history, positive or negative, of the

Which of the following selections is true regarding the Workers Compensation medical care benefit? A The injured worker has a set co-pay of $15 per incident. B Injured workers are entitled to receive all medical care reasonably required to cure or relieve the effects of the injury, with no deductible or coinsurance. C If the injured worker contributed to his or her own injury, coinsurance of 80/20 would apply. D The injured worker is charged a co-pay of $15 for use of an emergency room for a non emergency.

B Injured workers are entitled to receive all medical care reasonably required to cure or relieve the effects of the injury, with no deductible or coinsurance. Correct! The Workers Compensation medical care benefit has no time or dollar limits, and no deductibles or coinsurance may be charged to the injured worker. Time and Dollar Limit Current workers compensation law requires that the cost of medical care or treatments necessary to return the worker to the workforce must be paid without limitation as to time for treatment or services or actual dollar amounts paid. Only when the worker's injuries have been described as permanent and stationary might further medical payments be waived by the employee. An injured worker may continue working under a doctor's restrictions and be returned to his/her former duties with accommodations in the kind or amount of work expected. When it is determined that a worker cannot be returned to his or her former occupation, it may become necessary to offer the employee alternative work that will last at least 12 months, compensate the employee at least 85% of his or her former wage, and not require an unreasonable commute to or from the workplace. Under workers compensation, medical expenses for physical therapy and chiropractic services are limited to 24 visits each.

All of the following are true in regards to 24 Hour Coverage EXCEPT A Gaps in coverage are reduced as employees get coverage for both occupational and nonoccupational injuries and diseases. B It can be distributed through a life insurance policy. C Employees are covered around the clock. D It reduces litigation concerning cause of injury or disease.

B It can be distributed through a life insurance policy. Correct! The terminology "24 Hour Coverage" comes from the fact that employees are covered "around the clock", i.e. 24 hours a day, 7 days a week, 365/366 days a year. While they are working, employees are covered under the Workers Compensation part of the policy. Off-the-job they are covered under the nonoccupational part. 24 Hour Coverage does not include distribution through a life insurance policy.

Workers compensation statutes require employers to meet capital reserves requirements sufficient to pay any claims that might arise. Employers can meet such obligations through all of the following EXCEPT A Competitive state funds. B Second injury funds programs. C Self-insurance plans. D Assigned risk plans.

B Second injury funds programs. Correct! Second injury funds are a method by which employers manage the risks associated with the hiring of "previously injured" potential employees.

What is the purpose of California's State Compensation Insurance Fund (SCIF)? A To provide insurance to people who would be financially unable to obtain it otherwise B To make workers compensation insurance available, especially to smaller companies with more limited payrolls C To provide income replacement for California residents who are temporarily or permanently disabled D To pay claims on behalf of insurers that are unable to pay claims due to insolvency

B To make workers compensation insurance available, especially to smaller companies with more limited payrolls Correct! California's State Compensation Insurance Fund (SCIF) provides workers compensation insurance. However, commercial insurers may also provide this insurance. The State's plan is typically utilized only if a company cannot otherwise obtain the coverage in the commercial market. So, SCIF typically works with small employers with limited payrolls, as opposed to large corporations.

Which of the following statements is true regarding the premium computation for workers compensation insurance? A The insured pays a guaranteed premium based on an estimated value of the annual income received. B The premium is set at the beginning of the policy period and will not change. C A premium auditor has the right to examine the insured's compensation records at the end of the policy period to determine the actual premium basis. D The premium base for workers compensation insurance varies by the type of industry in which the insured is involved.

C A premium auditor has the right to examine the insured's compensation records at the end of the policy period to determine the actual premium basis. Correct! Because the initial premium calculation is based on estimated payrolls, a premium auditor may inspect actual payrolls paid to ensure that adequate premiums are being paid. Review ContentNext Question

Which of the following statements is true regarding the premium computation for workers compensation insurance? A The insured pays a guaranteed premium based on an estimated value of the annual income received. B The premium is set at the beginning of the policy period and will not change. C A premium auditor has the right to examine the insured's compensation records at the end of the policy period to determine the actual premium basis. D The premium base for workers compensation insurance varies by the type of industry in which the insured is involved.

C A premium auditor has the right to examine the insured's compensation records at the end of the policy period to determine the actual premium basis. correct! Because the initial premium calculation is based on estimated payrolls, a premium auditor may inspect actual payrolls paid to ensure that adequate premiums are being paid.

Workers compensation laws provide all of the following types of benefits EXCEPT A Rehabilitation benefits. B Death benefits. C Compensatory benefits. D Medical benefits.

C Compensatory benefits. correct! Award for pain and suffering is not compensated under workers compensation. Part One - Workers Compensation Insurance Workers compensation coverage, which applies to accidental bodily injury, death, or occupational disease, provides coverage for the statutory benefits required under the state's workers compensation laws. The actual benefits provided are not included, only a reference to the individual state's law. The policy also states that the insured is responsible for any benefits over those required by law that may be required due to the insured's willful misconduct or violation of safety or employment laws. Supplemental payments also are included and are similar to those found in other types of insurance policies. They include the following: Defense costs; Expenses incurred at the insurer's request; Premiums for certain bonds; Litigation costs; Interest on judgments required by law until the insurer offers a settlement; and All expenses the insurer incurs. The workers compensation section also contains the other insurance clause. It states that the insurer will pay equal shares in the event there is other insurance, including self-insurance, that can also respond to the loss.

States with monopolistic state workers compensation funds A Require all employers in their state to purchase workers compensation insurance regardless of their financial capacity. B Sell workers compensation insurance through private insurers that are in the state and receive a "kickback" for all policies sold on an annual basis. C Do not allow private insurers to be licensed to write workers compensation coverage D Provide workers compensation insurance through managed risk plans

C Do not allow private insurers to be licensed to write workers compensation coverage Correct! Under the monopolistic state fund program, no private insurer is allowed to market competitive programs in the state. In such states, workers compensation is available to all employers, but employer's liability coverage may or may not be offered.

Which of the following is not a factor in determining rates charged by the California State Compensation Insurance Fund for insurance issued by it? A The manner in which work is conducted. B A reasonable regard for the accident experience and history of each such insured. C The extent to which the employees in a particular establishment have or have not persons dependent on them for support. D A reasonable regard for the insured's means and methods of caring for injured persons.

C The extent to which the employees in a particular establishment have or have not persons dependent on them for support. correct! "A", "B" and "D" are all listed by the California Insurance Code as factors in determining rates charged by the State Compensation Insurance Fund. Another factor in addition to these would be bodily risk or safety, or other hazards of the plant, premises or work of each insured employer. The code specifically states that rates shall take no account of the factor stated in selection "C".

According to the standard workers compensation and employer liability policy form, a state should be listed in Part Three - other states' insurance of the workers compensation and employers liability policy when A The insurer is not licensed to write workers compensation in that state. B The state has a monopolistic workers compensation fund. C The insured expects to extend operations to that state. D The insured has operations in the state when the policy is written.

C The insured expects to extend operations to that state. correct! By naming a state in Part Three of a workers compensation and employer liability (WC&EL) policy, an employer provides that company operations may be conducted in that state. The state in which a temporary or new operation exists must be listed in the 3C part of the information page. It is common for this section to list or describe all states other than monopolistic states. This offers the insured the greatest protection for incidental or new exposures. If the state is not listed, no coverage applies. A critical component to this coverage is when the work began. If it is after the effective date of the policy and the insured has made no other arrangements for coverage (self-insurance), then coverage applies as if the state were listed in 3A - mandatory coverage. However, if work is underway on the effective date, coverage will only apply if the insurer is notified within 30 days. For example, an insured has a calendar year policy and begins work in June in a new state. The state in which work is conducted is not listed in 3A of the information page. As long as this state is listed in 3C, coverage will apply as if it were listed in 3A. In policy period 2 of the following year, the insured's work continues. An injury occurs in March of the second policy term. The insured, in order to have coverage, would have had to notify the insurer by the end of January of policy period 2. If they did, the state would be listed in 3A, and coverage would apply. If the insured did not notify the insurer there would be no coverage even if the state continued to be listed in 3C. Injuries that occur in states in which the employer and employee do not reside can get complicated. It is easier to think of work performed when completed by employees who live and work in a particular state, even if the employer's headquarters is not in that state.

What method of premium computation relates an employer's losses, payroll, and premiums to the rating bureau's classifications of operations? AExperience modification factor BWorkers classification factor CMerit rating plan DArbitration plan

Correct! An experience modification factor is developed by a rating bureau. The calculations relate an employer's losses, payroll, and premiums, segregated according to classifications of operations, all as reported to the bureau by the employer's insurance company.

An employer that qualifies for a self-insured workers compensation plan may wish to further limit his liability against catastrophic losses by purchasing excess insurance coverage called A Catastrophic excess coverage. B Self-insurance liability coverage. C Extreme liability coverage. D Aggregate excess coverage.

D Aggregate excess coverage. correct! Aggregate excess coverage covers liabilities above the employers "retention requirement" up to a predetermined loss limit. Self-insured Employers Almost all states allow employers to retain the risk of Workers Compensation losses. Employers who qualify may self-insure their Workers Compensation obligation. However, the state requires that a surety bond be pledged to the state. Larger amounts of bond may be required if the state deems it necessary. Therefore, such a program is generally only feasible for large employers. An employer that provides a self-insured Workers Compensation plan may wish to purchase excess insurance coverage to cover catastrophic losses and therefore limit its liability. Excess Workers Compensation coverage generally is one of 2 types, aggregate excess or specific excess coverage. Aggregate Excess, which is a form of stop loss coverage, requires that the employer pay the initial part of all monetary claims up to a retained limit. Once a claim exceeds the plan limit, the excess coverage pays all additional monetary claims to the stated limit of the aggregate excess policy. Specific excess also requires a retention limit, but the limit is for 1 loss or all losses from a single occurrence. If covered losses exceed the retention limit, the insurer would pay additional losses up to the policy limits.

According to the conditions of a workers compensation policy, the insurer has the right to inspect the insured workplace A With at least 10 days' notice. B With the consent of the insured. C With at least 5 days' notice. D At any time.

D At any time. correct! The insurer has the right to inspect the insured workplace at any time. Part Six - Conditions The conditions found in the workers compensation and employers liability policy include the following: Inspection - The insurer has the right to inspect the workplace at any time. Long-term policy - If the policy period is longer than 1 year and 16 days, all policy provisions will apply as though a new policy was issued on each annual anniversary date. Transfer of your rights and duties (assignment) - The insured's rights and duties may not be transferred to anyone else without the insurer's written consent. Cancellation - The insurer must provide the insured with at least 10 days advanced written notice for any type of cancellation. The insured may cancel the policy with written notice to the insured. Sole representative - The first named insured will act on behalf of all insureds under the policy.

Under the Workers Compensation Reform Act, the Commissioner sets recommended, nonmandatory premium rates and then allows individual companies to add administrative overhead and expense costs which result in a final rate plan. This type of rating method is known as A Closed rating plan. B Nonmandatory rate plan. C Reform rating plan. D Open rating plan.

D Open rating plan. correct! Under the open rating plan, the Commissioner sets recommended, nonmandatory pure premium rates that are expected to cover the costs of benefits and loss adjustment expenses. Other administrative overhead and expenses are to be added by individual companies resulting in a final rate plan that utilizes market competition to keep premiums rates low.

Workers compensation statutes require employers to meet capital reserves requirements sufficient to pay any claims that might arise. Employers can meet such obligations through all of the following EXCEPT A Self-insurance plans. B Assigned risk plans. C Competitive state funds. D Second injury funds programs.

D Second injury funds programs. correct! Second injury funds are a method by which employers manage the risks associated with the hiring of "previously injured" potential employees. Monopolistic vs. Competitive In some states, employers are required to purchase workers compensation insurance from a state-operated entity. These are called monopolistic state funds. Private insurance companies cannot write workers compensation insurance in competition with these state funds. In other states, workers compensation is purchased by employers from those insurers authorized to write casualty insurance. The coverage and benefits are mandated by state regulations. This is known as a competitive market. End Quiz Chapter Quiz -Question 7 of 12 Chapter: Workers Compensation - General Concepts Workers compensation statutes require employers to meet capital reserves requirements sufficient to pay any claims that might arise. Employers can meet such obligations through all of the following EXCEPT