Ins Exam N - Workers Comp

Question 1

Exclusive Remedy Ins Program *

Answer 1

> WC COMPENSATION is an EXCL REMEDY INS PROGRAM
w/ one exception, injured EE cannot file a lawsuit even if employer is negligent
- if employer fails to carry WC ins, then EE may seek restitution thru court

Question 2

State Workers’ Compensation Laws *

Answer 2

STATE WC LAWS MAY BE EITHER

• compulsory
• elective

Question 3

COMPULSORY WORKERS’ COMPENSATION LAW

Answer 3

> States that covrg is required for every employer except for a few specified exceptions
State specific penalties assessed if employer fails to secure/maintain covrg
Most states have compulsory laws

Question 4

Elective Compensation Law *

Answer 4

> PERMITS AN EMPLOYER TO REJECT COVRG
- if rejected, EE can sue under common law
EE HAS THE RIGHT TO REJECT ELECTIVE COVRG
- if rejected, EE has the right to bring action against the employer

Question 5

Monopolistic State Funds

- Funding for WC Benefits

Answer 5

• to be insured against WC claims, the employer must buy covrg from the state fund
• Private Ins Cos are not allowed to compete against these funds

Question 6

Competitive State Funds

- Funding for WC Benefits

Answer 6

• Give Employers a choice between purchasing WC Ins from a state fund or a private Ins Co
• State fund competes w/ private Ins

Question 7

Self-Insurance Method

- Funding for WC Benefits

Answer 7

• Employer sets up a fund to pay WC claims and files evidence of its existence w/ the state WC authority
• Employer must handle benefit costs and claim expenses, as well as medical and legal servicesn

Question 8

Benefits Provided *

Answer 8

WC laws vary from state to state, but in general they pay benefits in four categories

• Disability/loss of income benefits
• Medical benefits
• Survivor/death benefits
• Rehabilitation benefits

Question 9

Disability/Loss of Income Benefits *

Answer 9

> Compensate EEs who are unable to wrk as the result of a work-related injury or occupational disease
Intended to replace a portion of lost income, but not all of it
Type of benefit depends on injury sustained

Question 10

TOTAL DISABILITY - severe injury/disease

- Disability/Loss of Income Benefits

Answer 10

> a severe injury/disease that means EE can never wrk again in that particular employment

Question 11

TOTAL DISABILITY - weekly cash benefits

- Disability/Loss of Income Benefits

Answer 11

> Weekly cash benefits are paid up to certain % (ie: 66 2/3%) of wage beginning after waiting period has been satisfied but lmtd to the state ave wkly wage
Most waiting periods range from 3-7 days; benefits begin after the waiting period has been satisfied and continue for a specific length of time depending on the classification of disability
a retro period is est for total disability cases; if the disability lasts longer than the retro period (ie 14 days), wages that were withheld during the waiting period are reimbursed back to injury party on a retro basis

Question 12

Temporary Partial Disability *

- Disability/Loss of Income Benefits

Answer 12

> usually results in a restriction of duties but not a great deal of lost time b/c injury is relatively minor
compensation generally is lmtd to the difference between post-loss wages for the recovery period

Question 13

Permanent Partial Disability *

- Disability/Loss of Income Benefits

Answer 13

> Incls loss of limb, sight, or hearing
Although injury does not result in an ability to wrk, injury never goes away
to compensate for this, law allows a scheduled benefit based on the extent of the injury in addition to the lost wages benefit

Question 14

Medical Benefits

Answer 14

> pays cost of various types of medical svcs required b/c of an employmnt-related injury
Nearly any type of realted medical expense is covered
No upper dollar lmt nor is there a lmt on the period of time for which expenses will be paid
Benefits usually payable immediately

Question 15

Survivor/Death Benefits *

Answer 15

> compensates a surviving spouse, children, or other relatives of an EE whose death results from a wrk-related injury or occupational disease
- provides indemnity pymnts (typically wkly) to surviving dependent spouse and children until - spouse remarries or children reach a specified age (usually 18yrs old)
survivor benefits generally incl a wkly benefit and a stipulated amount for funeral and burial expenses

Question 16

Rehabilitation Benefits *

Answer 16

> Designed to assist injured wrkrs to return to wrk as soon as possible
Rehabilitation benefits usually paid in addition to wkly indemnity and medical benefits

Question 17

Workers’ Compensation Liab Policy

Answer 17

> Contract consists of 2 types of covrgs

• Part I - WC
• Part II - Employer’s Liab

Question 18

Part I: Worker’s Compensation *

Answer 18

• will pay for all medical expenses
• incls benefits required by W/C law
• Provides benefits for injuries and occupational disease suffered by EEs arising out of their employment
  
  • must be from wrk-related causes
  • non-work-related causes not cvrd under W/C law
• does not pay for pain and suffering losses

Question 19

Injuries Not Covered

- Part I: Worker’s Compensation *

Answer 19

• Burden of proof on the employer
• Injuries not covered incl
  
  • injury caused by the EEs willful intention to injure self or another
  • injury sustained while intoxicated
  • injury caused by EEs failure to use provided safety equipment
  • pain and suffering

Question 20

Part II: Employer’s Liability *

Answer 20

• Provides covrg to the insured for sums the insured becomes legally obligated to pay under common law b/c of a wrk-related injury or occupational disease
• Applies in situation that are not covered by W/C law
• An EE who is unable to collect W/C under state law may still sue the employer for damages
• Ex situations of this incl: xempt employmnts, illegal employments, and non-compensable injuries

Question 21

Coverage is provided for the following:

- Part II: Employer’s Liability

Answer 21

• SUIT BROUGHT BY INJURED EEs, EVEN IN CASE OF GROSS NEGLIGENCE
• SUITS BROUGHT BY SPOUSES OR DEPENDENT OF INJURED WORKERS
• Legal defense costs for Employer

Question 22

Basic Limit of Coverage Available

- Part II: Employer’s Liability

Answer 22

under this section is 100/500/100:

• $100k for BI
• $500k agg
• $100k for disease

Question 23

PART III: OTHER STATE’S INSURANCE

Answer 23

• This covrg is provided by both sections of the W/C and Employer Liab policy
• Only applies if the states are listed in the dec
• Useful when an insured Co has EEs traveling in other states

Question 24

PART III: OTHER STATE’S INSURANCE 2

Answer 24

• Other state’s covrg cannot be written to covr xposure in monopolistic states or countries
  
  • Since these states regulate and provide compensation benefits, W/C ins must be purchased form a state-run insurer
• Insured must provide notice to the insurer as soon as wrk begins in a new state

Question 25

Part V: Premium *

Answer 25

• Rates for ea wrk classification are dvlpd by the National Council on Comp Ins and are based on the type of wrk EEs perform and their relative xposures to wrk-related injuries
  
  • referred to as the book rate, or manual rate
• W/C rates are based on per $100 of payroll for ea applicable job classification

Question 26

Premium Audit *

Answer 26

• Since the initial W/C premium is a deposit prem (a prem paid in advace based on est factors), a prem audit is conducted @ the end of the policy period
• This audit takes into acct all of the actual factors involved so taht a final prem can be determined

Question 27

Part I: Workers’ Compensation Exclusions

Answer 27

• W/C policies will not make pymnts for:
  
  • SERIOUS and WILLFUL MISCONDUCTED BY the EE
  • Employmnt of a person hired in violation of the law
  • Failure to comply w/ a health or safety regulation
  • Discharge or discrimination against an EE in violation of W/C laws

Question 28

Workers’ Compensation Assigned Risk Pans *

Answer 28

An assigned risk, or residual mrkt, plan is a risk pooling arrangmnt for employers that cannot obtain W/C ins thru the normal channels
- commonly referred to as the W/C assigned risk pool

Question 29

Worker's Compensation benefits include: 
A. unlimited medical expenses 
B. funeral expenses 
C. rehabilitation benefits 
D. All of the Above

Answer 29

All of the Above