Deck 7: Workers Compensation Insurance

Question 1

Explain how a company might qualify to become a self-insurer.

Answer 1

Under most states' schemes, a company can qualify to become a self-insurer when it has a net worth of $1 million and has posted a bond to cover that amount.

Question 2

What is subrogation?

Answer 2

Subrogation is to the power of the insurance company to sue in the name of the policy holder to recoup the money it paid out on the insurance claim.

Question 3

Which party did the chancery court agree with? What reason did that court give for its decision?

Answer 3

The chancery court agrees with Szarek and states that because the insurance pol- icy was ambiguous about which state would be covered, it would be construed against the insurance company.

Question 4

How do insurance companies set their rates?

Question 5

What is a fiduciary?

Question 6

Under what circumstances may a company obtain multiple workers'
compensation insurance policies?

Question 7

Explain the state-mandated features of a workers' compensation insur- ance policy.

Question 8

Can an insurance company draft its exclusions in such a way that it prevents most employees from being covered?

Question 9

What rules and regulations govern font sizes in insurance policies?

Question 10

What is a premium?

Question 11

According to Szarek, which state's laws should be followed in paying out the workers' compensation claim in this case?

Question 12

Explain state-based workers' compensation insurance programs?

Question 13

What are limited policies?

Question 14

What does the court of appeals say about construing the unambiguous terms of an insurance policy?

Question 15

Do all workers' compensation insurance policies contain a duty to defend clause?

Question 16

What are the three basic options open to an employer who wishes to comply with state law requiring workers' compensation insurance coverage?

Question 17

What is underwriting?

Question 18

How are premiums calculated?

Question 19

Explain the basic features of an insurance policy.

Question 20

What is a "choice of law" provision as it is explained in this case?

Question 21

What type of notice are employers in your state required to post concerning workers' compensation coverage? Do they resemble the notices offered in this chapter from New Jersey or Massachusetts?

Question 22

Insurance companies have existed for centuries.

Question 23

The process of evaluating the risks involved with issuing an insurance policy is called subrogation.

Question 24

What are policy exclusions?

Question 25

What principles do courts follow in construing the provisions of insurance policies?

Question 26

Some states provide state-based workers' compensation insurance programs.

Question 27

An insurance policy is a contract.

Question 28

The name for the contract between the insurance company and the insured.

A)Premium.
B)Insurance coverage.
C)Policy.
D)Deposit.

Question 29

Locate your state's statutes regarding the obligation of employers to provide workers' compensation insurance coverage.What options are available for employers in your state?

Question 30

An insurance company is allowed to sue others, not be insured, to reclaim the money it has paid out.

Question 31

Do the laws applying to self-insurance unduly favor large companies over those with smaller assets?

Question 32

Employers are required by state law to provide workers'
compensation insurance coverage to their employees.

Question 33

Insurance companies charge policies to their customers as payment for workers compensation insurance coverage.

Question 34

Explain an insurance company's duty to defend under a workers'
compensation insurance policy.

Question 35

What rule of construction is followed in interpreting the language of an insurance policy that is considered to be ambiguous?

A)That the policy should be interpreted to deny coverage to as many employees as possible.
B)That the policy should be interpreted against the insurance company and in favor of as many employees as possible.
C)Courts are not allowed to interpret insurance policies.
D)That the policy should be interpreted in favor of the state, whenever possible.

Question 36

An insurance company is a fiduciary for the companies and employers that it ensures.

Question 37

Why is workers' compensation insurance different than other types of insurance?

A)Because workers' compensation insurance does not involve insurance companies.
B)Because workers' compensation insurance does not collect premiums.
C)Because workers' compensation insurance is mandated by the state, it has many more restrictions on in than other types of insurance.
D)Because workers' compensation insurance is illegal.

Question 38

Employers and companies are not allowed to act as self-insurers.

Question 39

The name of the regular monthly payment that the insured makes to the insurance company.

A)Premium.
B)Indemnity.
C)Installment.
D)Policy.

Question 40

Each state has a statute that provides sanctions and time for companies that fail to obtain valid workers' compensation insurance coverage.

Question 41

What are the consequences for an employer who fails to maintain workers' compensation insurance coverage?

A)There are no consequences.
B)The employer must pay the employee's total medical bills and other benefits directly out of its own budget.
C)The Workers' Compensation Board will pay premiums on the company's behalf.
D)The company will be forced out of business.

Question 42

Payment to the insured for a loss covered in the insurance contract:
.

Question 43

The process of reviewing many different factors to determine the risk of investment: .

Question 44

The right of an insurance company to bring suit to reclaim funds it has indemnified: .

Question 45

Explain the following terms, and how they relate to workers' compen- sation insurance coverage: premium, policy, and duty to defend.

Question 46

How does a company qualify as a self-insurer?

Question 47

A relationship in which one person, or entity, is obligated to act in a trustworthy relationship to the other: .

Question 48

What is the rule about ambiguities in insurance policies?

A)The policy will be construed in favor of the employee and against the insurance company.
B)The policy should always be construed in favor of the insurance company.
C)There are no rules about how the policy should be interpreted.
D)The entire policy should be ruled legally ineffective and void.

Question 49

One of the main duties that an insurance company has under its workers' compensation policy is to provide a legal defense when an injured employee contests a claim.This is called:

A)Subrogation.
B)Duty to defend.
C)Fiduciary obligation.
D)Underwriting.

Question 50

This type of insurance policy has many different exclusions and only focuses on a very narrow area of coverage.

A)Defined policy.
B)Requisite policy.
C)State policy.
D)Limited policy.

Question 51

What roles does the state play in regulating workers' compensation insurance coverage?

Question 52

The text discusses three possible methods for an employer to obtain workers' compensation insurance coverage.List and explain each.

Question 53

A company with sufficient revenue may decide to forego both the state-based insurance fund and private workers' compensation insurance in favor on this arrangement:

A)Refusal to enter the workers' compensation program.
B)Take advantage of special legislation that allows it to avoid the workers' compensation system.
C)Become a self-insurer.
D)Request employees to sign waivers that prevent them from filing claims for workers' compensation.

Question 54

The insured's payment to the insurance company: .

Question 55

There are three possible options for a company to comply with workers' compensation law and obtain coverage for its employees.One option is to enroll in a state-based program and another option is to become a self-insurer.What is the third option?

A)Request waivers from employees.
B)Obtain a waiver from the state.
C)Obtain private workers' compensation insurance.
D)Refuse to provide workers' compensation insurance coverage.

Question 56

Explain the basic arrangement between an insurance company and an insured.

Question 57

Explain how insurance rates are set.