Chapter 1
Workers’ compensation pays on a
a) Tort basis.
b) Contributory negligence basis.
c) Comparative basis.
d) No-fault basis.
d) No-fault basis.
Very generally speaking, under which of the following categories of employment are
workers commonly considered covered for workers’ compensation purposes?
a) Real estate agents or brokers
b) Domestic help (in the home)
c) Noncitizens
d) Agricultural laborers
Noncitizens
Services NOT needed by a self-insuring employer are
a) Loss control
b) Loss adjusting
c) Claims administration
d) None of these (i.e., all are needed)
d) None of these (i.e., all are needed)
When should a particular state be listed in Item 3C. of the Information Page of the standard
workers’ compensation policy?
a) When the insured anticipates having employees working in that state sometime
during the policy period.
b) When the state has a monopolistic state fund.
c) When the employer’s insurance company is not licensed to write workers’
compensation insurance in that state.
d) When the insured already has employees working in that state at the time the policy
goes into effect.
a) When the insured anticipates having employees working in that state sometime
during the policy period.*
Hayseed Mutual Insurance Co. has paid workers comp statutory benefits to an injured
employee of its insured, Travis Retail. It appears, however, that the negligence of a third-
party contractor working on the Travis Retail location directly lead to the worker’s injuries.
What can Hayseed Mutual do?
a) Nothing more than pay out the statutory benefits to Travis Retail’s injured employee
and hope that Travis Retail pursues a claim against the contractor.
b) Hayseed Mutual can subrogate directly against the at-fault contractor to recover what
it has paid out (and expects to pay out) in workers comp benefits to the injured
worker.
c) Hayseed Mutual can decline to pay any further statutory benefits to the injured
worker thereby requiring the injured worker to pursue a tort liability claim against the
at-fault contractor.
d) Hayseed Mutual can assign its right to pursue a tort claim against the at-fault
contractor to its insured, Travis Retail.
b) Hayseed Mutual can subrogate directly against the at-fault contractor to recover what
it has paid out (and expects to pay out) in workers comp benefits to the injured
worker.
A few of the earliest workers’ compensation laws in the United States didn’t actually survive.
Why did these laws disappear?
a) They were often determined to be unconstitutional.
b) The benefits were severely underfunded.
c) Society lost interest in achieving the philosophical objective of workers’
compensation.
d) All of the above.
a) They were often determined to be unconstitutional.
There is a sole proprietor whose business provides consulting services to other businesses.
The sole proprietor has no other employees; however she currently contracts with seven
independent contractors to perform specified functions ranging from IT to legal analysis. She
operates in a state that exempts employers with fewer than five employees from the workers’
compensation system and she has chosen to not participate. What is a disadvantage for this
sole proprietor associated with her decision to not be a part of workers’ compensation?
a) She might be penalized if her independent contractors should have been considered
employees and she did not cover them under workers’ compensation.
b) She might be sued by one or more of her independent contractors for injuries or
illnesses they sustain while performing work for her business.
c) Neither a) nor b)
d) Both a) and b)
d) Both a) and b)
Various market mechanisms, such as assigned risk plans, allow employers that are
considered uninsurable to access workers’ compensation insurance. Employers with poor
historical loss experience are considered high risk and might encounter difficulty in finding
workers’ compensation coverage. The way to obtain coverage is through a special type of
insurance market called a
a) secondary market
b) complimentary market
c) primary market
d) residual market
d) Residual market
Coverage for workers under the Longshore & Harbor Workers Compensation Act
(L&HWCA) can be added to the standard workers’ compensation policy by endorsement.
a) True
b) False
The Jones Act is a federal law creating an opportunity for injury compensation to be paid out
to:
a) railroad workers
b) domestic employees
c) farm workers
d) merchant marines
d) merchant marines
Which of the following was NOT a change driven by recommendations from the National
Commission on State Workmen’s Compensation Law?
a) The use of the “manifestation” date of occupational diseases for starting the statute of
limitations clock for reporting such claims.
b) Removal of maximum limits on the amount of medical expense benefits payable.
c) Increasing focus on formal workplace safety programs.
d) Discouraging the use of deductible workers’ compensation insurance programs.
d) Discouraging the use of deductible workers’ compensation insurance programs.
What purpose is served by a “reciprocity” agreement in workers’ compensation?
a) It tries to guarantee that an employee cannot sue his or her employer for injuries that
are not compensable under workers’ compensation.
b) It’s an understanding between individual states declaring that workers from their own
states who are injured as out-of-state workers will only be covered by their own
workers’ compensation statutes.
c) It’s an agreement between individual fellow employees that allows each to be held
personally liable for the other’s injuries when negligence is involved.
d) It’s an agreement between all insurance companies writing workers’ compensation
insurance in a given state that describes how much each company will pay into a
second injury fund.
b) It’s an understanding between individual states declaring that workers from their own
states who are injured as out-of-state workers will only be covered by their own
workers’ compensation statutes.
Priority should be given to the ___________ of the employer when an underwriter is
attempting to classify the employer as a particular type of risk.
a) operations
b) location
c) competitors
d) executive management
a) operations
In most cases, the standard workers compensation policy will indicate a maximum limit on
how much the insurer will pay for _______________ but there is no such policy limit for
______________.
a) property damage; pain and suffering
b) workers comp statutory benefits; employer’s liability legal damages
c) employer’s liability legal damages; workers comp statutory benefits
d) workers comp statutory benefits; property damage
c) employer’s liability legal damages; workers comp statutory benefits*
Which part of the workers’ compensation policy includes employers’ liability coverage that
protects against potential liabilities not within the scope of the workers’ compensation law,
yet arising out of employee injuries?
a) Part One
b) Part Two
c) Part Three
d) Part Four
e) Part Five
b) Part Two
Most workers' compensation laws today replace what percent of an employees income?
67% of an employee's income
**BONUS POINTS**
You now have a chance to take Chapter 2 for 300. Should you get this question right, you may get the points for this question if answered correctly.
From the information in the previous question, which of the following is likely the most
important factor in determining whether one of her independent contractors is considered an
employee rather than an independent contractor under workers’ compensation?
a) The contractor was hired by the sole proprietor after an open and extensive search.
b) The contractor is paid a salary by the sole proprietor.
c) The sole proprietor has defined the scope of the contractor’s work.
d) The sole proprietor retains the right to control all aspects of the contractor’s work.
d) The sole proprietor retains the right to control all aspects of the contractor’s work.*
Name the 2/3 advantages of self insurance in the workers compensation field?
a) Lower costs as a result of not paying insurance premium loading.
c) Improved cash flow.
d) Greater control over claims payments.
When should a particular state be listed in Item 3C. of the Information Page of the standard
workers’ compensation policy?
a) When the insured anticipates having employees working in that state sometime
during the policy period.
b) When the state has a monopolistic state fund.
c) When the employer’s insurance company is not licensed to write workers’
compensation insurance in that state.
d) When the insured already has employees working in that state at the time the policy
goes into effect.
a) When the insured anticipates having employees working in that state sometime
during the policy period.
Most state workers’ compensation laws permit an employer to retain the workers’
compensation risk if it can be proven that:
a) the employer’s firm has publicly traded shares of its equity stock.
b) the employer has the financial strength to pay claims.
c) the employer’s hazards to which employees are exposed are very small.
d) the employer’s firm has an annual profit of $5 million or more.
b) the employer has the financial strength to pay claims.
What is a programmed violation?
This does not exist, and is not considered a category for citations or penalties levied by OSHA
What purpose is served by a "Reciprocity" agreement in workers compensation?
It’s an understanding between individual states declaring that workers from their own
states who are injured as out-of-state workers will only be covered by their own
workers’ compensation statutes.
What is the difference between a primary and secondary market?
What is a third-party over action?
When a worker sues a subcontractor, and then the subcontractor sues the worker back for alleged negligence contributing to the accident
When was MEMIC founded?
1993