WORKERS COMPENSATION QUESTIONS & ANSWERS(RATED A+)

WORKERS COMPENSATION
QUESTIONS & ANSWERS(RATED
A+)

Workers' compensation laws are _____________ in every state. -
ANSWERCompulsory

Compulsory - ANSWEREmployers are required to comply with state workers'
compensation laws and must purchase a workers' compensation insurance policy

Employers in ___________ states have the option to enroll in the workers'
compensation system and may elect NOT to purchase a workers' compensation
insurance policy - ANSWERElective
(Texas is the only elective state)

Policy Providers - ANSWER- In most states, employers have the ability to purchase
a workers' compensation insurance policy from a variety of providers
- Policy providers include competitive state funds (state-run insurance companies),
private insurance companies, and, in some states, self-insurance (employers'
insurance themselves)

Monopolistic states... - ANSWERdo not allow for various options as their state laws
require employers to purchase a worker's compensation policy strictly from the state
fund. Typically, the state fund policies do not include employers' liability coverage
and a stop gap endorsement must be purchased to remove the coverage gap.
(North Dakota, Ohio, Washington and Wyoming are monopolistic states)

Workers' compensation is consider a ______________ coverage - ANSWER"no-
fault"

"No-fault" coverage - ANSWERAn injured worker does not have to prove the
employer was at fault for the injury in order to qualify for coverage.
- In exchange for this, the injured employee gives up the right to sue their employer
for damages (as declared by the exclusive remedy provision)

Workers' compensation coverage consists of three parts: - ANSWER1. Part One:
Workers' Compensation
2. Part Two: Employers' Liability
3. Part Three: Other-States

Part One: Workers' Compensation Coverage - ANSWERProvides benefits to
employees who are injured or sickened as a result of their employment

,(Workers' Compensation Coverage) There are four types of benefits employees can
receive - ANSWER1. Medical Expenses (Medical costs to treat the injured or ill
employee)
2. Disability Income (If the covered injured or ill employee experiences a loss of
income, lost wage benefits are paid for)
3. Rehabilitation Expenses (Physical rehabilitation costs and any associated
expenses incurred by the injured or ill employee)
4. Death Benefits (Funeral expenses and income stipends for the eligible
dependents are paid for should an employee's death occur due to employment)

Part Two: Employers' Liability Coverage - ANSWERProtects the employer in the
event an employee makes a claim against them for an injury or illness that is NOT
COVERED by workers' compensation laws

Dual Capacity - ANSWERAn injured employee, after filing and receiving benefits for
a workers' compensation claim, also sues their employer for actions other than as an
employer.
- Most often seen as a products liability claim against a manufacturer who is also the
employer

Consequential Bodily Injury - ANSWERAn employee filed a claim against their
employer as one of their family members was injured or became ill due to the
employee's working conditions

Care and Loss of Services (AKA "loss of consortium") - ANSWERAn injured worker
files a claim against their employer as they are unable to perform certain home or
childcare duties as a result of a workplace injury or illness

Third Party Over - ANSWERA workers' compensation claim is the sole remedy
available for an employee injured within the scope of employment. However, in
certain situations, the employer may be held liable for additional damages. These
are called "Third Party Over" or "Negligence" actions

Contractual Liability - ANSWERIt is common in business transactions for contracts to
include clauses that require one party to indemnify the other if the other party is
found liable for damages or injuries to third persons.

Claiming Damages from a Non-Employer - ANSWERRemember, an injured
employee may still claim damages from a non-employer. When an injured employee
secures a judgment against a non-employer, the non-employer usually attempts to
collect reimbursement from the employer.
- When the non-employer uses contractual liability as the reason for reimbursement,
it's called Third Party Over action
- When no contractual liability exists, a negligence action is filed

Third Party Action Over - Example - ANSWERHank rents office space from Laura. In
the lease agreement is a provision that states that, if Laura is found liable for any
damages that occur within the space Hank is renting, Hank must reimburse Laura for
those damages.

, Hank decides to build a break room and hires Monty to install cabinetry. Two months
after the cabinets are installed, one of them falls on Janice, causing injuries.
Janice collects workers' compensation from Hank, which is the only remedy available
by law. However, Janice also sues Laura, the landlord, for not providing a safe
building. Since Janice is not limited to workers' compensation from Laura (since
Janice is not Laura's employee), a court awards Janice $100,000 in damages.
Laura then turns to Hank, the tenant, to be reimbursed for the damages under the
lease contract. Hank must pay Laura $100,000, in addition to the workers'
compensation award he already paid!
The fact that the relationship and the lease agreement allowed Hank to be liable for
more than just workers' compensation payments makes this a Third Party Over
action.

Part 3: Other-States Coverage - ANSWERWorkers' compensation coverage (Part
One) only provides coverage in the states declared in the policy. However, an
unforeseen event or expansion may require an employee to operate in a state not
covered by the policy.
- If the employee is then injured, a workers' compensation claim could be under the
law of another state.
- If this is the case, a state's workers' compensation laws could have higher benefit
payouts than the insured's policy allows for and the insured would be responsible for
the difference

- To combat this issue, a coverage-broadening statement can be included in the
ACORD 130 (3c) so that the insurance carrier will cover the (potentially increased)
amount required for benefits in the non-declared state(s). Here is an example
statement:
"All states except monopolistic"

A policy limit is the - ANSWERhighest amount of damages the insurance carrier will
pay for a claim that the insured's policy covers
- Workers' compensation coverage limits vary depending on the state

Part 1: Workers' Compensation Coverage Limits - ANSWERThere are no set
coverage limits for the amount an employee can be paid for Part 1 Benefits
coverage.
- Most other policies have a fixed limit

Each state has its own method to calculate the amount that will be provided to pay
for an injured or ill employee's benefit expenses. More often, the following two
factors are used somewhere in their calculations: - ANSWER- The employee's
average weekly wage
- The severity of the injury or illness

Part 2: Employers' Liability Coverage Limits -
Unlike Part 1 of coverage which has no limits, state laws have determined limits for
employer's liability coverage. These limits vary from state to state but the most
common basic limits are: - ANSWER- $100,000 per occurrence for bodily injury
- $100,000 per employee for bodily injury by disease
- $500,000 overall policy limit for bodily injury by disease