The employer has an aggregate stop loss excess insurance policy. It is:

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Prepare for the California Self‑Insurance Plans (SIP) Exam with our interactive quiz. Benefit from multiple-choice questions, detailed explanations, and essential tips to enhance your knowledge and succeed in your exam!

Multiple Choice

The employer has an aggregate stop loss excess insurance policy. It is:

Explanation:
In California, an aggregate stop‑loss excess insurance policy is allowed for self‑insured employers. This type of coverage protects the employer by capping total losses over a policy period, shifting part of the risk to the insurer. Because the risk to the state is reduced when the employer has this protection, regulatory authorities can grant a credit against the required security deposit. That means the amount the employer must post with the state is reduced by the value of the stop‑loss coverage. So, the right answer is that the policy is legal and reduces the amount of the security deposit.

In California, an aggregate stop‑loss excess insurance policy is allowed for self‑insured employers. This type of coverage protects the employer by capping total losses over a policy period, shifting part of the risk to the insurer. Because the risk to the state is reduced when the employer has this protection, regulatory authorities can grant a credit against the required security deposit. That means the amount the employer must post with the state is reduced by the value of the stop‑loss coverage. So, the right answer is that the policy is legal and reduces the amount of the security deposit.

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