Utah Contractor Practice Exam

If your workers' compensation insurance policy lapsed two weeks ago and an employee is injured, what is the status of your coverage?

1. You are covered because you mailed a check

2. You are covered because the injury occurred within 30 days of the lapse of coverage

3. You are not covered because the policy lapsed

4. You are not covered because the injury occurred after the two-week grace period

The correct answer is: You are not covered because the policy lapsed

Your workers' compensation insurance policy is vital for protecting both your employees and your business in the event of workplace injuries. If a policy lapses, it means that the coverage provided by that policy is no longer active. In this situation, the correct answer emphasizes that once a workers' compensation policy has lapsed, there is no active coverage in place—regardless of any subsequent circumstances, such as when the injury occurs or whether a payment was sent afterward. Even if there is a belief that financial actions, like sending a payment, could retroactively restore coverage, the policy would still have formally lapsed before any such action could take effect. Insurance companies require valid, active policies at the time of an incident for coverage to apply. Therefore, an injury that occurs after the policy has lapsed will not garner any benefits through that policy, leaving you responsible for any associated costs or liabilities from the injury. The notion of a grace period can create confusion, but in this case, coverage is simply not in effect due to the lapse. This is why it's essential for contractors to maintain their workers' compensation insurance consistently to ensure that employees are protected at all times while on the job.