Florida Building Contractor Business/Finance Practice Exam

How can an employer obtain worker's compensation insurance?

1. By applying for a government grant

2. By purchasing a policy from an insurance agent

3. By self-insuring without accreditation

4. Through a voluntary worker's association

The correct answer is: By purchasing a policy from an insurance agent

An employer can obtain worker's compensation insurance by purchasing a policy from an insurance agent. This process is essential because it allows employers to protect their employees in the event of workplace injuries or illnesses. Insurance agents are knowledgeable about the various insurance products available and can help businesses find a policy that meets their specific needs and complies with state regulations. Typically, once an employer chooses to move forward with an agent, they will go through an application process, where the agent will analyze the business's needs, provide quotes, and explain coverage options. This approach not only provides necessary financial protection but also ensures that the employer adheres to the legal requirements for worker's compensation insurance, which is mandated in many states, including Florida. Other options mentioned, such as applying for a government grant or self-insuring without proper accreditation, do not provide legitimate means of acquiring worker’s compensation insurance. Government grants may help fund various business initiatives but are not directly linked to obtaining insurance. Similarly, self-insuring requires meeting specific state criteria and obtaining accreditation, which is not a straightforward process and carries significant risk. Finally, while voluntary worker's associations can provide certain benefits, they do not replace the necessity or legal requirement for formal worker's compensation insurance policies.