Alabama Insurance Adjuster Practice Exam

What is the primary purpose of workers' compensation insurance?

1. To provide financial protection for businesses against lawsuits

2. To ensure employees receive medical treatment only for work-related injuries

3. To provide employees financial protection against work-related injuries

4. To cover employees for off-the-job injuries as well

The correct answer is: To provide employees financial protection against work-related injuries

The primary purpose of workers' compensation insurance is to provide employees with financial protection against work-related injuries. This insurance is designed to ensure that workers receive benefits that cover medical expenses, rehabilitation costs, and lost wages due to injuries sustained while performing their job duties. Workers' compensation serves as a safety net that addresses the financial burden that can accompany work-related incidents, offering peace of mind to both employees and employers. It functions on a no-fault basis, meaning that employees can receive these benefits without having to prove negligence on the part of their employer, facilitating quicker and more consistent support for injured workers. The other choices focus on aspects that don't capture the fundamental goal of workers' compensation. For instance, while financial protection against lawsuits is relevant to businesses, it does not directly relate to the support provided to employees injured on the job. Similarly, ensuring that employees receive treatment specifically tied to work-related injuries is part of the system but doesn’t encapsulate the broader financial protection it offers. Lastly, covering off-the-job injuries is outside the scope of workers' compensation, as it specifically addresses injuries occurring in the course of employment.