Workers Compensation and Employers Liability

Question 1

Five Employer Common Law Obligations (5)

Answer 1

SSSSW (5)

(employees have to prove failing of one)

○ Safe place to work
○ Safe tools
○ Sober / Competent fellow employees
○ Safety rules established and enforced
- Warn workers of any known dangers

Question 2

3 Employer Common Law Defenses

Answer 2

○ Assumption of risk
○ Contributory negligence
○ Fellow-servant rule (fellow employee rule)
- Negligence of co-worker caused accident, not the employer

Question 3

Historical purpose of Workers Comp (3)

Answer 3

Common law didn’t pay for injured employees family or spouses

Employers were winning most of the cases

Public pressure to create WC Law (statutes) to supersede but not eliminate common laws

Question 4

Purposes of Current WC Law (5)

Answer 4

(shit haPPENS)

Predictable cost

Prompt and reasonable payment of benefits

Exclusive or Sole Remedy

Negligence no longer basis for determining liability or recovery

Safety promoted

Question 5

Prompt and reasonable payment of benefits (5 benefits)

Answer 5

Statutory benefits

Benefits are partial and final

AOE / COE
§ Arising out of employment
§ Course of Employment

“injury”

“Occupational Disease”

Question 6

Compulsory vs. Elective States - 2 Elective States

Answer 6

Texas and NJ

Question 7

3 Common Funding Methods to Comply with WC Law

Answer 7

Private Carriers

State Funds

Self Insured where permitted

Question 8

4 Monopolistic States and How to add EL to them 3

Answer 8

NOWW (North Dakota, Ohio, Washington, Wyoming)

Add EL via endt, separate policy or stop gap to GL

Question 9

Penalties for Non-Compliance

Answer 9

I C FIME

Cease work orders

Fines

Misdemeanors

Imprisonment

Injured employees can sue

Employer loses common defense

Question 10

4 Employer Statuses

Answer 10

Primary or direct Employer
○ Traditional employer / employee relation
○ Employer directly hires
○ Obligated to provide WC

De facto Employer
○ Employers that classify employees differently but in reality are responsible for providing benefits

Statutory or de jure employer
○ State specific classification of employees (or lack of)

General / Regular Employer and Special Employers
○ Employee leasing companies
○ When state silent, special employer required to provide
- Can customize with contracts

Question 11

Exemptions to WC Law (2)

Answer 11

Numeric Exemptions (some states)
§ Employee count less than a certain amount in certain states and certain industries

General Exemptions for Certain Types of Employees

Question 12

General Exemptions for Certain (7) Types of Employees

Answer 12

CAR VIDS

Casual laborers
□ Hired workers for work not typically related to the business

Agricultural or farm workers
□ Depending on payroll, full vs part time, pay level, family member, # of workers, migrant or seasonal

Real estate salespersons

Voluntary Compensation and EL
□ Voluntarily bringing in these exempt employees

Independent Contractors, Volunteer workers and leased employees may or may not

Domestic employees (housekeepers, nannies)

Specific positions
□ Sole proprietors and partners
□ Executive officers typically employees
□ Opt out / Opt in Rules

Question 13

General Exemption for who is employee (Employee vs independent 1 / Common Law 2 / Volunteer Workers 1 / Leased workers 3)

Answer 13

Employee vs independent
® Sometimes defined in WC statute

Common law
® Revert to this when statutes silent
® IRS criteria

Volunteer workers
® Typically not covered but can be specified in states such as volunteer firemen

Leased Workers
® Parties in leasing agreement
® Can define in contract
® Typically client company is employer
- Alternate employer endt

Question 14

The Information Page (4 Sections of it)

Answer 14

1- Insured

2- Policy Period

3- Activation of Coverage

4- Classifications, payrolls and premium

Question 15

Info Page - 3- Activation of Coverage (A 2/ B 2/ C 3 )

Answer 15

A: Part one WC Insurance
§ List all states insured operates or expects to
§ Cannot List monopolistic

B: Part Two EL Insurance
§ Applies only for states listed in 3a
§ Limits
□ BI by Accident each accident
□ BI by disease policy limit
□ BI by disease each employee

C: Part 3 Other States Insurance
§ Activates WC and EL for states after effective date
§ States must be listed
- All states except NOWW and those in 3a

Question 16

WC Insurance - How insurance applies (2)

Answer 16

Applies to BI by accident or disease including death
§ BI accident must be during policy period
- BI disease must be caused or aggravated by employment conditions

Question 17

Four Categories of Benefits as required by WC Law

Answer 17

(Medical, Compensation, Rehab, Death)

Medical Benefits

Compensation for Lost Wages
○ 4 Types
§ Permanent partial
§ Temporary partial
§ Temporary total
§ Permanent total
○ Varies by state in amount, length and waiting period

Rehabilitation benefits
○ Sometimes under medical benefits
○ Restore to max physical capacity

Death or survivorship benefits
○ Burial
○ Income benefits to dependents

Question 18

Payments the Insured must make (3 law breaks and one more)

Answer 18

Excess of benefits because of the insured’s (Misconduct, illegal hiring, safety violation, other laws)
§ Serious and willful misconduct
§ Knowingly employed an employee in violation of law
§ Failure to comply with health or safety law
- Discharge, coercion, or discrimination against an employee in violation of law

Question 19

WC - Recovery From Others (Right to ___ /Protect rights of …. /when must happen)

Answer 19

Right to subrogate

Insured must protect these rights of CO

Waived rights must happen before loss

Question 20

EL - Insurance Company’s Promise to Pay (what they pay/ cause/ and 4 types of claims)

Answer 20

Sums insured legally must pay for damages

Because of BI to employee

4 types of claims (where permitted by law)

Third Party Over
- Lawsuits filed by a third party seeking recovery from the insured because it was held liable for an insured’s employee’s injury

Care and Loss of Services
§ Lawsuits from employee spouse or children for loss of services from injury
§ Services include sexual, companionship, help in performing chores, etc.

Consequential Bodily Injury
§ Disease or injury to family member as consequence of employee injury

Dual Capacity claims
- Injury of employee that happened when employer operating in a different capacity as just an employer

Question 21

Third Party Over - EL vs CGL Which ones responds? (EL 1 / GL 1)

Answer 21

EL
® Excludes Liability assumed under contract; HOWEVER, EL provides coverage if 3rd party claim filed on basis of tort (negligence).
® Example: Employee sues third party that was negligent but third party sues employer claiming they’re negligent

CGL
® Excludes EL, but not liability assumed under insured contract
- Example: Third party sues on basis of contractual liability qualifying as an insured contract

Question 22

EL - Exclusions (13)

Answer 22

IF FEW FIB C MIP (If a few fib it’s cause of an MIP) (All F’s are related to federal laws)

Illegally hired employees with knowledge of employer

Federal Law Acts that work is subject to

Federal Employers’ Liability Act where work is subject to it

Employment‐related practices

WC or similar law - Any obligation under

Fines and penalties imposed for violation of federal or state law

Intentional injury caused by NI

Bodily injury to masters or crew members of any vessel *

Contractual Liability

Migrant and Seasonal Agricultural Worker Protection Act where damages are payable under it

Injury outside US, territories / possessions and Canada
○ Exclusion for employees on temp work assignments

Punitive or exemplary damages

Question 23

Other States insurance - How this Insurance Applies (5) (States listed in …. / Must begin after… / Who’s reimbursed/ how many days to notify?

Answer 23

Coverage Applies to
§ States listed in 3c
§ Must begin work in state after effective date
□ If before then it should be in 3a
§ Reimburse NI if insurance is not allowed to pay benefits directly to employee
§ 30 days to notify CO of operations existing on effective date not in 3a
- Insured to notify CO AT ONCE if work begins in state in 3c

Question 24

Potential Coverage Issues with Part 3 - Other States Insurance (4)

Answer 24

30 days notice can be an issue

Reliance on item 3c to provide automatic coverage

Notifying company at once can be issue

Some carriers aren’t registered in all states

Question 25

Jurisdictional statutes when Out of State employee injured varies (5) (All of these injuries covered /

Answer 25

○ All in-state injuries covered
○ Excludes injuries to transients if coverage available in other states and the other states grant reciprocity
○ Completely bars recovery
○ Some states are silent
- Law leaves decision to courts

Question 26

EL - Part Four – Your Duties If Injury Occurs (6)

Answer 26

(SIN CIN)
- Immediate medical and other services
- Information on injury - provide it
- Notices, demands, and legal papers to be sent to CO
- Cooperate
- Subrogation rights not to be interfered with
- No voluntary payments or incurring expense

Question 27

Part 5 Premium - Our Manuals (7)

Answer 27

(PARRC MF)

Premium Payments
Audits
Records
Remuneration
Classifications based on estimated exposures
Manuals Determine Premium
Final Premium

Question 28

EL - Part Six – Conditions

Answer 28

(CLITS)
Cancellation
Long Term policy
Inspection
Transfer of your rights and duties
Sole rep

Question 29

Maritime Coverage Endt (3)

Answer 29

EL for claims brought against employer due to BI to crew of vessel

Must occur in operation of vessel between ports of US, Alaska, Hawaii or Canada

No coverage for transportation, wages, maintenance, and cure unless a premiums shown on the endorsement Schedule
-If purchased, excludes punitive damages related to duty or obligation to provide these

Question 30

Longshoremen And Harbor Workers Compensation Act Coverage Endorsement (LHWCA) (4 - Where applies / who applies to / who doesn’t provide to/ coverage)

Answer 30

Provides both WC Insurance and EL Insurance for work subject to the LHWCA

Covers traditional maritime occupations (Longshore workers, ship repairers, shipbuilders, harbor construction)

Injuries must occur on water or adjoining areas (ports)

Does not apply to crew of vessel

Question 31

Foreign Workers Compensation and Employers Liability Endorsement (2 main coverages of it / 3 limitations)

Answer 31

Repatriation expenses
- Cost to bring injured or dead employee back to US

Endemic diseases
§ Disease prevalent to a region

Limitations
§ Must be hired in US
§ Only covers temp assignments <90 days
- Pays only statutory benefits of designated state(s)