Texas Property & Casualty: Types of Casualty Policies

Correct

The answer is B: The employer loses key common-law defenses if the employee sues

In Texas, workers' compensation is elective for most private employers (Labor Code §406.002; public employers must carry it). However, employers who opt out (non-subscribers) lose three important common-law defenses (§406.033): contributory negligence, assumption of risk, and the fellow-servant doctrine. This makes it much easier for injured employees to sue and recover damages from non-subscribing employers.

Source: §406.002 · Insurance Code §406.033

Correct

The answer is D: Lifetime Income Benefits (LIBs) for the worker's life

Lifetime Income Benefits (LIBs) are reserved for the most catastrophic injuries under Texas Workers' Compensation. LIBs are paid until the worker's death for the injuries listed in Labor Code §408.161, including: loss of both hands at or above the wrist, loss of both feet at or above the ankle, loss of one foot at or above the ankle and one hand at or above the wrist, total and permanent loss of sight in both eyes, a spinal injury causing permanent and complete paralysis of both arms, both legs, or one arm and one leg, a physically traumatic brain injury that, as determined using evidence-based medicine, causes a permanent major neurocognitive disorder requiring occasional supervision for routine self-care and leaving the worker permanently unemployable, and certain severe third-degree burns. LIBs are paid at 75% of the worker's average weekly wage.

Source: §408.161

Correct

The answer is B: An SR-22 financial responsibility filing

An SR-22 is not an insurance policy itself — it is a certificate filed by an insurer with the Texas Department of Public Safety proving that the driver carries at least the state-required minimum liability limits (30/60/25 in Texas). DPS requires one to reinstate a license suspended after a DWI conviction, and after a second or later conviction for driving without insurance (Transportation Code §601.231). The filing must be maintained for two years from the conviction; if the policy lapses, the insurer must notify the state.

Source: §601.231

Correct

The answer is B: Temporary Income Benefits, computed from the first day of disability

Temporary Income Benefits (TIBs) replace lost wages while the worker recovers. Under Labor Code §408.082, no income benefits are paid for a disability that lasts less than a week, and benefits normally accrue from the eighth day; but when the disability lasts two weeks or longer, compensation is computed from the date the disability began. This worker is off 12 weeks, so the first week is paid too. TIBs are generally 70% of the difference between the pre-injury average weekly wage and post-injury earnings (75% for the first 26 weeks for a worker earning less than $10 an hour), subject to the state maximum (§408.103), and continue until maximum medical improvement or 104 weeks.

Source: §408.082 · Insurance Code §408.103

Correct

The answer is A: No, one policy pays a single limit however many vehicles it lists

Insurance Code §1952.104 requires a Texas UM/UIM policy form to provide that, regardless of the number of persons insured, policies or bonds applicable, vehicles involved, or claims made, the most it pays any one person for one occurrence is the limit stated in the policy. The Texas personal auto policy carries matching wording (the limit is the most it pays regardless of the vehicles or premiums shown in the Declarations), and the Texas Supreme Court has held that it clearly bars stacking within one multi-vehicle policy (Upshaw v. Trinity Cos., 1992). So the insured can collect no more than the $50,000 per-person limit under this policy, even though the damages are $80,000.

Source: Insurance Code §1952.104