ACSR 9 – Workers Compensation And Employers Liability Insurance Practice Test

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Part Two provides coverage for these types of liability when an employee sues a third party such as a machine manufacturer, and the third party can then sue the insured.

Third-party-over claims Subrogation claims Direct action claims Indirect liability claims

Correct Answer:

Third-party-over claims

Explanation:

The situation describes third-party-over liability. In Employers Liability coverage, the insured can be exposed when a third party (like a machine manufacturer) is sued by an employee for damages, and that third party then seeks indemnity from the insured. That sequence—employee sues a third party, and the third party sues the insured for indemnity—is classic third-party-over, and Part Two provides coverage for this type of liability. Subrogation would occur after the insurer has already paid a claim and then tries to recover from the third party, not the insured being sued by the third party. Direct action would involve a third party suing the insurer directly, which isn’t the described scenario. Indirect liability claims isn’t a standard term for this context.

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