Which of the following is an insurance coverage that is required by law in most states?

• A. Life insurance.
• B. Workers' compensation.
• C. Property insurance.
• D. Disability insurance.

Answer: (B)

The main concept here is that workers' compensation is a legally required coverage for employers. In most states, if you have employees, you must carry workers' compensation insurance. This coverage provides medical care and income replacement to workers who are injured or become ill on the job, and it operates as a no-fault system, meaning workers don’t have to prove the employer was negligent to receive benefits. The idea behind this requirement is to protect workers from bearing the full cost of on-the-job injuries and to limit an employer’s liability through a standardized benefits system. The coverage can be provided through a state-run fund or a private insurer and is funded by premiums based on payroll and job risk. There are some exceptions (such as certain sole proprietors or family businesses in some states), but for most employers with employees, this is the coverage that state laws mandate. Other types of insurance—like life insurance, property insurance, or disability insurance—are not generally mandated by law for businesses in the same way, though they may be important for risk management or personal planning.