Introduction to Risk Management and Insurance, 10e (Dorfman/Cather)
Chapter 21 Unemployment and Workers’ Compensation Insurance
1) Government control over the money supply using interest rates to effect changes in the
economy is called:
A) fiscal policy
B) monetary policy
C) tax policy
D) transfer payments
2) Experience rating of the unemployment program has which of the following effects?
A) Penalizes good employers that never fire employees
B) Encourages short-term layoffs and causes an unstable workforce
C) Charges employers more when the economy is weak, thus charging for poor experience when
companies can least afford it
D) Provides funds to continue employment instead of dismissing employees
3) Which of the following is paid for under most workers’ compensation systems?
A) Injuries resulting from intoxication
B) Self-inflicted intentional injuries
C) Injuries resulting from willful failure to follow safety rules
D) Injuries occurring from “horse-play” on the job
4) Workers’ compensation covers all of the following losses except:
A) medical expenses resulting from a job-related injury
B) rehabilitation expenses resulting from a job-related injury
C) lost wages during a disability that results from job-related injuries
D) medical expenses resulting from an at-home accident
5) Choose the year closest to the enactment of unemployment insurance:
A) 1929
B) 1935
C) 1946
D) 1955
6) Which of the following is not a purpose of workers’ compensation laws?
A) Give broad coverage to employees for work related injuries
B) Protect workers against lost earnings
C) Protect employers against the business interruption risk
D) Provide sufficient medical care for the injured worker
7) Unemployment benefits are usually available in which of the following situations?
A) Worker voluntarily quits to find a better job
B) Worker fired for theft
C) Worker is laid-off when employer becomes bankrupt
D) Worker is participating in a strike
8) The major change established by the passage of workers’ compensation laws was to:
A) help lawyers obtain more business
B) substitute the employer’s liability without fault for the common law doctrine of negligence
C) enable the employer to effectively defend itself in a liability suit
D) bar the employee from recovery for job related injuries
9) Which of the following is not a requirement for receiving unemployment benefits?
A) Experience a waiting period before benefits are paid
B) Have an earnings record
C) Have a continuing interest in employment
D) The national unemployment percentage must exceed a certain level
10) The exclusive remedy of workers’ compensation law states that the:
A) compensation scheme for a work-related injury is the employee’s choice
B) employer can sue employees for misconduct after compensation is paid
C) employee can only collect from the workers’ compensation system for work-related injuries
D) worker must exclusively use the tort system to resolve liability claims against the employer
11) Workers’ compensation is likely to cover all the following except:
A) 100 percent of lost wages during disability
B) medical expenses
C) rehabilitation expenses
D) reasonable funeral expenses
12) Which of the following is not an economic benefit to society of unemployment insurance?
A) Provides employers a liability-free way to discharge employees without cause
B) Provides spendable cash for dismissed employees
C) Abates the downward spiral of the economy because of reduced spending
D) Helps keep families together under hard economic times
13) Which of the following is false concerning unemployment insurance?
A) It is experience-rated.
B) It originated in the Social Security Act of 1935.
C) It is paid for by both the employee and employer in the form of a wage-based tax.
D) It does not provide benefits to a worker who voluntarily quits a job.
14) Which of the following does not influence a worker’s eligibility for, and amount of,
unemployment benefits?
A) Waiting period
B) Earnings record
C) Continuing interest in employment
D) Type of work performed
15) Which one of the following is not a concern of the risk manager with respect to workers’
compensation?
A) Health-related costs
B) Cumulative injury problems
C) The increasing frequency of litigation concerning compensation
D) The increasing use of the assumption of risk defense to deny workers’ compensation claims
16) Which of the following was a common law defense used by employers prior to the enactment
of workers’ compensation laws?
A) Strict liability
B) Comparative negligence
C) Contributory negligence
D) stare decisis
17) Each of the following describes a condition under which an employee is injured on the job.
Under which of these would the employer not have to provide workers’ compensation benefits to
the injured employee?
A) Employee falls asleep on the job
B) Employee is distracted by a fellow employee
C) Employee was late for work
D) Employee had several beers before work
18) What is the federal covered maximum wage for unemployment insurance taxation?
A) $700
B) $7,000
C) $70,000
D) $700,000
19) Unemployment insurance is financed by a ________ on covered wages.
A) 7.65% federal tax on covered wages up to $7,000
B) 6% federal tax on covered wages up to $7,000
C) 5.4% federal tax on covered wages up to $87,000
D) 6% state tax on covered wages up to $7,000
20) If a state collects unemployment taxes, then federal unemployment taxes are offset by up to:
A) 50%
B) 70%
C) 90%
D) 100%
21) When state unemployment funds are inadequate to continue paying benefits to unemployed
workers, the state can:
A) declare bankruptcy
B) levy additional taxes on an ad hoc basis, but no more than 10% in one year
C) do nothing other than file a claim under any private unemployment insurance it may have
purchased
D) borrow from the federal government without paying interest
22) Which of the following statements about workers’ compensation insurance is true?
A) The cost to employers has been increasing.
B) The premiums have been decreasing.
C) Insurers have been making high profits on this coverage.
D) None of the above
23) Workers’ compensation insurance today is primarily a federal, rather than a state, program.
24) All workers’ compensation claims are reviewed by special courts.
25) Experience rating of workers’ compensation insurance rewards employers with good safety
records.
26) Intentionally self-inflicted injuries are usually, though not always, covered by workers’
compensation insurance.
27) From the employer’s stand point, workers’ compensation insurance may be seen as a
substitute for other types of liability insurance.
28) The majority of workers’ compensation coverage comes from state-operated insurance pools.
29) Assumption of risk was a common defense used by employers prior to the enactment of
workers’ compensation laws.
30) The states can finance deficits in their unemployment compensation programs with interest-
free loans from the federal government.
31) Unemployment insurance is both a state and a federal program.
32) Cumulative injuries refer to disabling illnesses that occur over time in a working career.
33) Workers’ compensation insurance covers both job-related injuries and occupational diseases.
34) Explain the economic significance for the existence of unemployment insurance.
35) Explain how a worker can be disqualified for unemployment benefits.
36) Before workers’ compensation laws, what legal defenses did employers use when they were
sued by an employee injured at work? Briefly explain each of these defenses.
37) List and explain briefly the purposes of the workers’ compensation laws.
38) What are the general types of benefits provided under workers’ compensation?