14 Free Texas Workers' Compensation Practice Questions (2026)
Why Texas Workers' Compensation Is Its Own Exam Topic
Workers' compensation is the one casualty topic where Texas genuinely differs from every other state, and the exam knows it. Texas is the only state that does not require most private employers to carry workers' compensation insurance. An employer that declines becomes a “non-subscriber” and gives up the common-law defences that make the system a trade-off in the first place.
That single fact generates a disproportionate number of questions, and it is the one candidates who studied with national material get wrong, because national material teaches the compulsory model that applies almost everywhere else.
These 14 questions come from LanePrep's Texas P&C quiz bank and cover what the policy actually pays, the Texas non-subscriber rules, and how premium is built from payroll and classification. The Texas workers' compensation exam guide covers the same ground in prose if you want the explanation before the drilling.
Practice Questions 1-5: Workers' Compensation Coverage and Benefits
Question 1 (Chapter 4)
A Workers' Compensation policy includes Coverage A (Workers' Compensation) and Coverage B (Employers Liability). An employee is injured and sues the employer, alleging the employer intentionally removed safety guards from machinery. Which coverage under the WC policy may respond to this lawsuit?
- A) Coverage A — Workers' Compensation, which covers all employee injury claims
- B) Coverage B — Employers Liability, which covers the employer's legal liability for employee injuries in situations not covered by the workers' compensation statute, such as third-party-over actions or dual-capacity claims
- C) Neither coverage — intentional acts are always excluded
- D) The CGL policy would cover this claim, not the WC policy
Show answer & explanation
Answer: B
Coverage B (Employers Liability) of the Workers' Compensation policy covers the employer against lawsuits by employees (or their families) for work-related injuries in situations that fall outside the workers' compensation statute. This includes third-party-over actions (where a third party sued by the employee seeks contribution from the employer), dual-capacity claims, and consequential bodily injury claims by family members. Note: intentional acts by the employer may still be excluded depending on policy language and state law.
Question 2 (Chapter 4)
A worker in a chemical plant develops lung disease after 15 years of chronic exposure to toxic fumes in the workplace. The employer has Workers' Compensation insurance. Is this condition covered?
- A) No, because the condition developed gradually and was not caused by a specific accident
- B) Yes, this is an occupational disease — a condition caused by exposure to harmful conditions inherent in the employment — and it is covered under workers' compensation
- C) Only if the worker can prove the employer was negligent
- D) No, only acute injuries from specific incidents are covered
Show answer & explanation
Answer: B
Texas Workers' Compensation covers occupational diseases — conditions that arise naturally out of and in the course of employment due to workplace exposures. Unlike occupational injuries (caused by specific accidents or events), occupational diseases develop gradually from repeated exposure to harmful conditions such as chemicals, dust, noise, or repetitive motions. The disease must be causally connected to the employment. Workers' comp is no-fault, so negligence need not be proven.
Question 3 (Chapter 4)
A Texas employee is injured on the job when a forklift malfunctions. The employer has Workers' Compensation insurance. The employee wants to sue the employer for negligence in addition to collecting workers' comp benefits. Can the employee do so?
- A) Yes, the employee can sue the employer and collect workers' comp benefits simultaneously
- B) No, the exclusive remedy doctrine prevents the employee from suing the employer in tort when the employer carries workers' compensation — workers' comp benefits are the exclusive remedy
- C) Yes, but only if the employer was grossly negligent
- D) No, but the employee can sue the forklift manufacturer
Show answer & explanation
Answer: B
The exclusive remedy doctrine (also called the workers' compensation bargain) is a fundamental principle: in exchange for providing no-fault benefits to injured workers, the employer is protected from tort lawsuits by employees for workplace injuries. The employee receives guaranteed benefits without proving fault, and the employer avoids potentially larger negligence judgments. However, the employee may still sue third parties (like the forklift manufacturer) who contributed to the injury.
Question 4 (Chapter 6)
A Texas workers' compensation insurer pays $150,000 in benefits to an injured worker. The injury was caused by a defective machine manufactured by a third party. The insurer pursues a subrogation claim against the manufacturer. Under Texas workers' compensation subrogation rules, which statement is TRUE?
- A) The workers' comp insurer has no subrogation rights in Texas
- B) The insurer has a statutory right of subrogation against the responsible third party under the Texas Labor Code
- C) Only the injured worker can sue the third party; the insurer cannot participate
- D) The employer, not the insurer, holds the subrogation rights
Show answer & explanation
Answer: B
Under the Texas Labor Code (Chapter 417), a workers' compensation insurer has a statutory right of subrogation against third parties whose negligence caused the worker's injury. The insurer can intervene in or initiate a lawsuit against the responsible third party. If the injured worker pursues a third-party claim, the workers' comp insurer has a lien on the recovery. Texas law requires that the worker's interests be protected and that subrogation recoveries be allocated between the insurer and the worker.
Question 5 (Chapter 4)
A Texas worker dies from injuries sustained in a workplace accident. The employer has Workers' Compensation insurance. The worker is survived by a spouse and two minor children. How are death benefits calculated under Texas Workers' Compensation?
- A) The family receives a lump sum equal to the worker's annual salary
- B) Eligible beneficiaries receive weekly death benefits equal to 75% of the worker's average weekly wage, subject to the statutory maximum, plus burial benefits
- C) Death benefits equal 100% of the worker's average weekly wage with no maximum limit
- D) Only the spouse receives benefits; minor children are not eligible
Show answer & explanation
Answer: B
Under Texas Workers' Compensation, death benefits are paid to eligible beneficiaries (spouse and dependent children) at a rate of 75% of the deceased worker's average weekly wage, subject to the statutory maximum weekly benefit. Benefits are paid for the duration of eligibility (e.g., until a child reaches 18 or 25 if a full-time student, or until the spouse remarries). Burial benefits up to a statutory maximum are also provided.
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Practice Questions 6-10: Texas Non-Subscriber Rules and Employers Liability
Question 6 (Chapter 8)
Texas is unique among states regarding workers' compensation insurance. Which of the following BEST describes the Texas workers' compensation system for private employers?
- A) Workers' compensation is mandatory for all private employers in Texas
- B) Workers' compensation is elective (opt-in) for most private employers; employers who choose not to participate are called non-subscribers
- C) Workers' compensation is only required for employers with more than 500 employees
- D) Texas does not have a workers' compensation system at all
Show answer & explanation
Answer: B
Texas is one of the only states where workers' compensation is elective for most private employers. Employers who carry workers' compensation coverage are called subscribers, while those who opt out are called non-subscribers. Certain employers, such as those with government contracts, may be required to carry coverage. Non-subscribers must notify employees and TDI of their non-subscriber status.
Question 7 (Chapter 4)
An employer operates in a monopolistic state fund jurisdiction but also has operations in Texas. The employer's standard Workers' Compensation policy does not cover the monopolistic state. What coverage can the employer add to its WC policy to fill the gap for employer liability exposure in that state?
- A) An umbrella liability policy
- B) Stop-gap coverage, which provides Coverage B (Employers Liability) in monopolistic state fund states where the state fund provides only Coverage A
- C) A CGL endorsement for employee injuries
- D) No additional coverage is available; the employer must self-insure
Show answer & explanation
Answer: B
In monopolistic state fund states (like Ohio, North Dakota, Washington, and Wyoming), the state fund provides only Coverage A (statutory workers' compensation benefits). It does not provide Coverage B (Employers Liability). Stop-gap coverage is an endorsement added to the employer's Workers' Compensation policy or CGL policy to provide Coverage B (Employers Liability) protection in those monopolistic states, filling the gap left by the state fund.
Question 8 (Chapter 8)
A Texas private employer decides to opt out of the workers' compensation system and becomes a non-subscriber. An employee is subsequently injured on the job and sues the employer. What legal consequence does the employer face as a non-subscriber?
- A) The employer retains all common-law defenses and faces no additional liability
- B) The employer loses key common-law defenses: contributory negligence, assumption of risk, and the fellow servant rule
- C) The employer is automatically liable for a fixed $100,000 award
- D) The employer faces no consequences because workers' compensation is optional
Show answer & explanation
Answer: B
When a Texas employer opts out of workers' compensation (becomes a non-subscriber), they lose three critical common-law defenses in employee injury lawsuits: contributory negligence (the employee's own negligence contributed to injury), assumption of risk (the employee knew and accepted the risk), and the fellow servant rule (a co-worker's negligence caused the injury). This significantly increases the non-subscriber's legal exposure, making it easier for injured employees to recover damages.
Question 9 (Chapter 8)
A Texas workers' compensation claimant disagrees with the impairment rating assigned by the treating doctor after reaching maximum medical improvement. Under the Texas workers' compensation system, how is this dispute resolved?
- A) The claimant must accept the treating doctor's rating as final and binding
- B) The claimant may request a designated doctor examination through the Division of Workers' Compensation, and the designated doctor's opinion is given presumptive weight
- C) The claimant files a lawsuit in civil court to challenge the impairment rating
- D) The insurer unilaterally assigns a new impairment rating
Show answer & explanation
Answer: B
Under Texas workers' compensation, when a claimant disputes the impairment rating, they may request an examination by a designated doctor appointed by the Division of Workers' Compensation (DWC). The designated doctor's opinion on impairment rating is given presumptive weight, meaning it is presumed correct unless the challenging party presents a preponderance of contrary evidence. This process provides an independent medical evaluation to resolve disputes.
Question 10 (Chapter 5)
A Texas employer with a strong safety record and substantial financial reserves applies to the Texas Department of Insurance to self-insure its workers' compensation obligations instead of purchasing a policy. If approved, the employer becomes a:
- A) Risk retention group member
- B) Qualified self-insurer (certified self-insurer)
- C) Surplus lines policyholder
- D) Captive insurance company
Show answer & explanation
Answer: B
A qualified self-insurer (also called certified self-insurer) is an employer approved by the state to fund its own workers' compensation claims rather than purchasing insurance. Texas requires applicants to demonstrate financial strength, adequate reserves, and a satisfactory safety record. The employer must post a security deposit or surety bond to guarantee payment of claims. This is distinct from a captive insurer, which is a separate legal entity.
Practice Questions 11-14: Premium, Classification and Experience Rating
Question 11 (Chapter 2)
An insurer uses an employer's past claim history and frequency of losses to adjust the premium for a workers' compensation policy. This rating method is called:
- A) Manual rating
- B) Experience rating
- C) Retrospective rating
- D) Judgment rating
Show answer & explanation
Answer: B
Experience rating adjusts the premium based on the insured's own past loss experience compared to the average for their classification. If an employer has fewer losses than average, the experience modification factor (mod) reduces the premium below the manual rate. If losses are higher than average, the mod increases the premium. This differs from manual rating (which uses only class rates without individual adjustment), retrospective rating (which adjusts premium based on current-period losses after the policy period), and judgment rating (which relies on an underwriter's individual assessment).
Question 12 (Chapter 2)
A workers' compensation insurer uses an employer's experience modification factor (mod) of 0.85 to adjust the premium. The manual premium based on class rates is $20,000. What does the 0.85 mod indicate, and what is the adjusted premium?
- A) The employer has better-than-average loss experience; adjusted premium is $17,000
- B) The employer has worse-than-average loss experience; adjusted premium is $23,000
- C) The employer has average loss experience; premium remains $20,000
- D) The mod is irrelevant to premium calculation
Show answer & explanation
Answer: A
Experience rating adjusts premiums based on the insured's own loss history compared to the class average. A mod below 1.00 indicates better-than-average loss experience, resulting in a premium credit. A mod above 1.00 indicates worse-than-average experience, resulting in a premium surcharge. With a 0.85 mod: $20,000 x 0.85 = $17,000 adjusted premium. The employer saves $3,000 because their claims history is 15% better than the average for their classification. Experience rating rewards safety-conscious employers and penalizes those with frequent claims.
Question 13 (Chapter 2)
A large manufacturing company has a workers' compensation policy with retrospective rating. The provisional premium is $100,000 with a minimum of $70,000 and a maximum of $140,000. Actual losses during the policy year are very low. What happens to the premium?
- A) The premium stays at $100,000 regardless of losses
- B) The final premium is adjusted downward based on actual losses, but cannot go below $70,000
- C) The premium is adjusted to $0 because losses were low
- D) The minimum and maximum do not affect the final calculation
Show answer & explanation
Answer: B
Retrospective rating adjusts the final premium after the policy period based on actual loss experience during that period. With very low losses, the final premium will be reduced from the $100,000 provisional amount, but it cannot go below the $70,000 minimum. The minimum premium guarantees the insurer covers its fixed costs regardless of loss experience. Similarly, if losses were extremely high, the premium could increase but not exceed the $140,000 maximum. Retrospective rating provides a balance between risk sharing and premium predictability for large commercial accounts.
Question 14 (Chapter 7)
A Texas P&C agent collects a $12,000 annual premium from a commercial client for a workers' compensation policy. The agent deposits the check into the agency's general operating account used for payroll and office expenses. Under Texas law, this handling of premium funds is:
- A) Acceptable as long as the premium is forwarded to the insurer within 60 days
- B) A violation — premiums must be deposited into a separate trust or escrow account, not commingled with the agency's operating funds
- C) Permitted for commercial premiums over $10,000
- D) Required by TDI for proper accounting purposes
Show answer & explanation
Answer: B
Texas law requires insurance agents to maintain premium funds in a fiduciary capacity. All premiums collected must be deposited into a separate trust or escrow account and may not be commingled with the agent's personal or business operating funds. Depositing premiums into a general operating account violates fiduciary duty and is grounds for disciplinary action, including license revocation and potential criminal prosecution.
What Your Score Tells You
Workers' compensation is a small enough slice of the exam that you should not over-invest in it — but it is also concentrated enough that a few marks are cheaply won. Two things are worth memorising outright: Coverage A pays statutory benefits with no dollar limit, Coverage B (employers liability) covers the suits that fall outside the statute, and a Texas non-subscriber loses the contributory negligence, assumption of risk and fellow-servant defences.
If you missed more than five of these, re-read the non-subscriber material specifically. It is the highest-yield paragraph in the topic.
Then move on. The free Texas P&C practice exam will show you where workers' compensation sits relative to your real weak spots, and the LanePrep course handles it inside the casualty chapter rather than as a topic to study alone — sample chapter 1 free.
Texas non-subscriber rules verified against the Texas Labor Code and the Pearson VUE Texas examination content outline, August 2026.
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