The director may not accept as a deposit to secure incurred liabilities for the payment of compensation and the performance of obligations of a self-insured employer;

• A. Certificate of Deposit
• B. Cash
• C. Securities
• D. Surety Bonds

Answer: (A)

Collateral to secure incurred liabilities must be highly liquid and readily available to cover workers’ compensation payments and other obligations of a self-insured employer. Cash and marketable securities meet this requirement because they can be accessed or converted quickly. A surety bond provides a separate guarantee to back the obligations. A certificate of deposit, however, is a time deposit with a fixed term and penalties for early withdrawal, making it not readily redeemable when funds are needed. Therefore, the director cannot accept a certificate of deposit as the deposit to secure incurred liabilities.