Which of the following is not accepted as a deposit to secure incurred liabilities for a self-insured employer?

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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

Which of the following is not accepted as a deposit to secure incurred liabilities for a self-insured employer?

Explanation:
Deposits to secure incurred liabilities must be highly liquid and readily usable to cover claims without delay. Cash obviously fits, and a certificate of deposit provides a guaranteed amount that can be accessed when needed. A surety bond offers a third‑party guarantee that can be drawn on to satisfy obligations, so it’s acceptable as security. Securities, on the other hand, can fluctuate in value and may not be quickly liquidated at a known price when a claim needs to be covered, creating risk for timely payment. For that reason, securities are not accepted as a deposit to secure incurred liabilities.

Deposits to secure incurred liabilities must be highly liquid and readily usable to cover claims without delay. Cash obviously fits, and a certificate of deposit provides a guaranteed amount that can be accessed when needed. A surety bond offers a third‑party guarantee that can be drawn on to satisfy obligations, so it’s acceptable as security. Securities, on the other hand, can fluctuate in value and may not be quickly liquidated at a known price when a claim needs to be covered, creating risk for timely payment. For that reason, securities are not accepted as a deposit to secure incurred liabilities.

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