An Oregon contractor's employee is injured on the job, resulting in $25,000 in medical costs and 6 weeks of lost wages at $800/week. What is the contractor's liability if they have proper workers compensation coverage?
Correct Answer
B) $0
With proper workers compensation coverage, the contractor has no direct liability for covered workplace injuries as the insurance covers medical costs and lost wages.
Why This Is the Correct Answer
When an Oregon contractor carries proper workers compensation insurance, the insurance policy covers all costs of a covered workplace injury — including medical expenses and lost wages. The contractor's direct personal liability is $0. This is the fundamental purpose of workers compensation: to transfer the financial risk of workplace injuries from the employer to the insurance system.
Why the Other Options Are Wrong
Option A: $29,800
$29,800 represents the total of medical costs ($25,000) plus 6 weeks of lost wages (6 × $800 = $4,800). This would be the contractor's exposure without insurance, not with it. Having proper coverage eliminates this liability.
Option C: $25,000
$25,000 is only the medical cost portion. Even if someone incorrectly thought the contractor owed something, this figure ignores the lost wages entirely. With proper coverage, neither component is the contractor's direct liability.
Option D: $4,800
$4,800 represents only the lost wages portion (6 × $800). With proper workers compensation coverage, the contractor is not responsible for any portion of the injury costs — not even the wage-replacement component.
Memory Technique
Workers comp = a liability shield. When it's up (proper coverage), zero dollars pass through to the contractor. When it's down (no coverage), everything — plus penalties — hits the contractor directly. Coverage = $0 liability.
More Oregon Questions
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