Under Louisiana law, what is the minimum amount of workers' compensation insurance coverage required for construction contractors?
Correct Answer
B) No minimum - based on payroll
Louisiana workers' compensation coverage is based on payroll amounts and classification codes, not a fixed minimum dollar amount per occurrence.
Why This Is the Correct Answer
Louisiana workers' compensation insurance operates on a payroll-based system rather than fixed minimum coverage amounts. The premium and coverage are calculated based on the contractor's actual payroll amounts multiplied by classification rates specific to different types of construction work. This ensures coverage is proportional to the business size and risk exposure, making it more equitable than arbitrary fixed minimums.
Why the Other Options Are Wrong
Option A: $1,000,000 per occurrence
$1,000,000 per occurrence represents a fixed minimum amount, which is not how Louisiana structures workers' compensation requirements. The state uses a payroll-based calculation system instead of predetermined occurrence limits.
Option C: $100,000 per occurrence
$100,000 per occurrence suggests a fixed minimum coverage amount, but Louisiana doesn't establish workers' compensation requirements this way. Coverage is determined through payroll calculations and risk classification codes.
Option D: $500,000 per occurrence
$500,000 per occurrence implies a set minimum dollar amount, which contradicts Louisiana's payroll-based workers' compensation system that calculates coverage based on actual wages and job classifications.
Memory Technique
Remember 'Payroll = Premium' - Louisiana workers' comp is tied to what you PAY your workers, not a fixed PLAY amount.
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