Contractor License Practice Exam

Which of the following statements is true regarding Workers Compensation Insurance?

1. It is not necessary if an employer has less than five employees

2. It is optional for all employers

3. It covers rehabilitation costs

4. It only covers long-term disabilities

The correct answer is: It covers rehabilitation costs

Workers' Compensation Insurance is designed to provide financial assistance and cover various costs associated with workplace injuries and illnesses. One of the critical components of this insurance is that it covers rehabilitation costs. This means that if an employee is injured on the job and requires medical treatment or rehabilitation to recover and return to work, Workers' Compensation Insurance will pay for these expenses. This coverage is crucial to support employees in their recovery, helping them regain their ability to work and normal functionality. The other options present limitations or inaccuracies about the nature of Workers' Compensation Insurance. While employers with fewer than a specific number of employees may not be legally required to carry the insurance in all states, many still choose to do so for the protection it provides. The assertion that it is optional for all employers is misleading because, in many jurisdictions, it is a legal requirement despite the number of employees. The idea that it only covers long-term disabilities is incorrect, as Workers' Compensation covers a range of scenarios, including temporary injuries, medical expenses, and rehabilitation services, not just long-term conditions.