Arkansas Property and Casualty
Insurance Exam
Before workers comp laws, employers had 3 common law defenses to avoid paying claims- - ANS
Assumption of Risk - This defense placed all the risk on the employee as being responsible for knowing
the work conditions prior to employment.
Fellow Servant Rule - Removed the employer's negligence if a fellow employee contributed in any way
to the loss.
Contributory Negligence - Used to argue that the employee was partially at fault and therefore was not
eligible to recover benefits from the employer.
Compulsory - ANS In jurisdictions where Workers' Compensation benefits are mandated by state law,
employers are required to provide Workers' Compensation benefits to their employees—either via
insurance or self-insurance.
Elective - ANS In jurisdictions where Workers' Compensation benefits are not mandated by state law,
employers have the choice to accept or reject state Workers' Compensation laws. If an employer
chooses to reject the Workers' Compensation laws and an employee is injured, the employee may then
file a claim or lawsuit against the employer for injuries; and the employer is denied the use of common
law defenses, such as assumption of risk, contributory negligence, and negligence of a fellow employee.
Monopolistic vs. Competitive - ANS *Monopolistic - Workers' Compensation insurance only available
through state fund.
*Competitive - Workers' Compensation insurance available through private insurers.
Employment Covered - ANS Because Workers' Compensation insurance responds to workplace injuries,
it only provides coverage if an employment relationship exists between the employer and the injured
person. An employer-employee relationship exists if the employer:
, Retains the right to direct the way work shall be completed
Supplies the necessary equipment and tools to complete the work
Determines the work hours
Determines the end results of the work to be completed
Controls the frequency and timing of compensation for work
Exempt Workers - ANS Agricultural workers, such as farm and ranch laborers
Domestic employees
Casual laborers - Those whose work is non-recurring or irregular
Independent Contractors - Plumbers, electricians, and landscapers who work under contract for more
than one employer.
Sole - Owners, Partners, and Corporate Officers
Covered injuries include those that arise out of employment. this means- - ANS The injury must occur
while the employee is at work or working.
The employee is working the hours he/she is designated, or expected, to work.
The employee is performing the duties that he/she was employed to do.
The injury must arise from a risk that is reasonably related to employment.
Secondary Injury Fund - ANS The Second Injury Fund pays compensation on behalf of an employer to an
employee who has already suffered a prior disabling injury, and now sustains a subsequent injury, and
the combination of the two injuries creates a greater disability than the second injury would have
created by itself.
The employer is responsible only for compensation that would have been paid had the second injury
occurred without the existence of the prior injury, and the fund pays the difference.
Insurance Exam
Before workers comp laws, employers had 3 common law defenses to avoid paying claims- - ANS
Assumption of Risk - This defense placed all the risk on the employee as being responsible for knowing
the work conditions prior to employment.
Fellow Servant Rule - Removed the employer's negligence if a fellow employee contributed in any way
to the loss.
Contributory Negligence - Used to argue that the employee was partially at fault and therefore was not
eligible to recover benefits from the employer.
Compulsory - ANS In jurisdictions where Workers' Compensation benefits are mandated by state law,
employers are required to provide Workers' Compensation benefits to their employees—either via
insurance or self-insurance.
Elective - ANS In jurisdictions where Workers' Compensation benefits are not mandated by state law,
employers have the choice to accept or reject state Workers' Compensation laws. If an employer
chooses to reject the Workers' Compensation laws and an employee is injured, the employee may then
file a claim or lawsuit against the employer for injuries; and the employer is denied the use of common
law defenses, such as assumption of risk, contributory negligence, and negligence of a fellow employee.
Monopolistic vs. Competitive - ANS *Monopolistic - Workers' Compensation insurance only available
through state fund.
*Competitive - Workers' Compensation insurance available through private insurers.
Employment Covered - ANS Because Workers' Compensation insurance responds to workplace injuries,
it only provides coverage if an employment relationship exists between the employer and the injured
person. An employer-employee relationship exists if the employer:
, Retains the right to direct the way work shall be completed
Supplies the necessary equipment and tools to complete the work
Determines the work hours
Determines the end results of the work to be completed
Controls the frequency and timing of compensation for work
Exempt Workers - ANS Agricultural workers, such as farm and ranch laborers
Domestic employees
Casual laborers - Those whose work is non-recurring or irregular
Independent Contractors - Plumbers, electricians, and landscapers who work under contract for more
than one employer.
Sole - Owners, Partners, and Corporate Officers
Covered injuries include those that arise out of employment. this means- - ANS The injury must occur
while the employee is at work or working.
The employee is working the hours he/she is designated, or expected, to work.
The employee is performing the duties that he/she was employed to do.
The injury must arise from a risk that is reasonably related to employment.
Secondary Injury Fund - ANS The Second Injury Fund pays compensation on behalf of an employer to an
employee who has already suffered a prior disabling injury, and now sustains a subsequent injury, and
the combination of the two injuries creates a greater disability than the second injury would have
created by itself.
The employer is responsible only for compensation that would have been paid had the second injury
occurred without the existence of the prior injury, and the fund pays the difference.
