Ch. 2 Review Questions

Question 1

Why were workers’ compensation laws established by the individual states?

Answer 1

There are a few aspects of workers’s comp that vary from state-to-state:
Allowed insurance provider,
compensable injuries/illnesses,
benefit levels

Question 2

What are the four major provisions of workers’ compensation statutes?

Answer 2

1) Income replacement
2) Rehabilitation
3) Accident prevention
4) Cost allocation

Question 3

What are three types of workers’ compensation insurance?

Answer 3

Workers’s comp insurance may be:

	1) Monopolistically state funded
	2) Private carriers
	3) Self-insured

Question 4

How is the dollar value of the construction company’s workers’ compensation liability determined?

Answer 4

Workers’ comp premiums are calculated by:
(Base premium)(EMR)

Base premium calculated by:
	(Direct wages)(Base rat)/ $100

Question 5

What are monopolistic state agencies?

Answer 5

Insurance agencies funded by the state. They cover state wide workers’ comp for all work classifications.

Question 6

What are four types of injuries that are compensable in workers’ compensation insurance?

Answer 6

1) Temp partial disability
2) Temp total disability
3) Perm partial disability
4) Perm total disability

Question 7

How are benefits determined?

Answer 7

There are specific disability awards for perm partial disabilities. If a state doesn’t have a disability awards schedule, the employee may be compensated based on the percentage amount of disability ie. an employee with a 25% disability get paid 25% wages.

Question 8

Why are the base rates for roofers higher than those for plumbers?

Answer 8

The job classification for a roofer is inherently more dangerous than that of a plumber. More risk of injury = higher base premiums

Question 9

What is the experience modification ratio, and how is it determined?

Answer 9

EMR is a number that reflects a company’s 3 year injury claim cost in ratio to the average state wide 3 year claims cost. A new company with 0 claims has a ratio of 1.

Question 10

What are four strategies for reducing workers’ compensation costs?

Answer 10

1) Good accident prevention plan
2) Maintained contact with employees (encourage work return through care)
3) Good “Return-to-Work” program
4) Thorough investigations of accidents (understand steps to prevention)