For the Property & Casualty exam, workers' compensation insurance is tested both as a policy product and as a state-mandated system. Pennsylvania runs its program under the Workers' Compensation Act (Title 77), requires nearly all employers to carry coverage, and even operates its own insurer. This guide reviews how the workers' comp policy is built and rated, then anchors everything in Pennsylvania's specific rules—including the State Workers' Insurance Fund (SWIF) and the state's own rating bureau.

The workers' compensation policy (national structure)

The standard workers' comp policy has two main coverage parts:

• Part One – Workers' Compensation. The insurer pays all benefits the state's comp law requires—medical, disability income, specific loss, and death benefits. There is no dollar limit because benefits are set by statute.
• Part Two – Employers Liability. Covers the employer for work-related injury suits that fall outside the comp statute (for example, certain third-party-over actions). This part does carry limits.

Other elements include Part Three – Other States Insurance (extends coverage to operations in listed states) and the information page, which lists the states, class codes, and estimated payrolls used to price the policy.

Rating and premium are driven by:

• Classification codes matched to the type of work.
• Payroll (per $100) as the exposure base.
• The experience modification factor (mod), which raises or lowers premium based on the employer's loss history.
• A premium audit at the end of the term to reconcile estimated payroll with actual.

Pennsylvania's rating bureau

Pennsylvania is distinctive: instead of relying on NCCI, the state uses the Pennsylvania Compensation Rating Bureau (PCRB) to develop loss costs, classifications, and experience-rating for workers' comp (and a related bureau for coal-mine comp). The Pennsylvania Insurance Department reviews and approves the rates. Knowing that PA uses the PCRB is a classic state-specific detail.

Mandatory coverage in Pennsylvania

Coverage is mandatory for essentially every employer with one or more employees. An employer can meet the requirement by:

• Buying a policy from a private licensed insurer,
• Buying from the State Workers' Insurance Fund (SWIF), the state-operated guaranteed market, or
• Self-insuring with state approval.

An employer that illegally goes uninsured loses the exclusive-remedy shield, can be sued directly, faces criminal penalties and personal liability, and exposes injured workers to the Uninsured Employers Guaranty Fund (UEGF), which pays the worker and then seeks reimbursement from the employer.

Pennsylvania benefits the policy pays

Part One of the policy funds the statutory benefits:

• Medical – reasonable and necessary treatment with no deductible; an initial employer panel-provider period typically applies before the worker may choose freely.
• Wage-loss (disability) – about two-thirds (66 2/3%) of the average weekly wage (AWW), subject to a statewide maximum adjusted each year, with a higher percentage for low-wage workers. Disability is classified as temporary/permanent and total/partial.
• Waiting period – a 7-day waiting period for wage-loss benefits, paid retroactively to day one if disability lasts 14 or more days; medical benefits have no waiting period.
• Specific (scheduled) loss – set amounts for permanent loss/loss of use of body parts and for serious disfigurement of the head, face, or neck.
• Death benefits – wage-based payments to dependents plus a funeral allowance.

Disputes are decided by Workers' Compensation Judges and reviewed by the Workers' Compensation Appeal Board, all under the Bureau of Workers' Compensation (Department of Labor & Industry).

Who is exempt

Most workers are covered, but Pennsylvania recognizes limited exemptions:

• Sole proprietors and general partners (owners, not employees—may elect in).
• Certain executive officers and LLC members who qualify to be excluded.
• Agricultural labor below statutory thresholds, domestic servants, and casual workers.
• Federal employees, railroad workers (FELA), and maritime/longshore workers (federal acts).
• Licensed real estate salespersons paid by commission and certain religious exemptions.

Key Pennsylvania numbers to memorize

Common exam traps

• Confusing Part One and Part Two. Part One pays statutory benefits with no limit; Part Two (employers liability) has dollar limits.
• Assuming NCCI rates PA. Pennsylvania uses the PCRB.
• Forgetting PA has a state fund. SWIF is an alternative to private carriers.
• Putting a waiting period on medical care. Only wage-loss benefits have the 7-day wait.
• Overstating exemptions. Owners may need to elect coverage, but employees—including most part-timers—are covered.
• Quoting a fixed maximum benefit. The statewide cap is adjusted annually.

Quick recap

The workers' compensation policy pairs Part One (unlimited statutory benefits) with Part Two (employers liability, with limits), and it is priced on payroll per $100, class code, and experience mod, reconciled by premium audit. In Pennsylvania, the PCRB—not NCCI—develops loss costs, and coverage is mandatory for employers with one or more employees through a private insurer, SWIF, or approved self-insurance. Benefits include no-deductible medical, ~66 2/3% wage replacement capped at a yearly statewide maximum after a 7-day (retroactive at 14 days) waiting period, plus specific-loss and death benefits. The Uninsured Employers Guaranty Fund protects workers of lawbreaking employers. Remember the two policy parts, the PCRB, and SWIF, and the P&C workers' comp questions become reliable points.