Which form of deposit is NOT accepted by the director to secure incurred liabilities for a self-insured employer?

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

Answer: (D)

The correct answer highlights that a Certificate of Deposit (CD) is not accepted by the director as a form of deposit to secure incurred liabilities for a self-insured employer. This is primarily because a CD, while a safe investment, does not provide the same level of liquidity and immediacy required to cover incurred liabilities.

In the context of self-insurance, employers need to ensure that the funds can be readily accessed to pay claims as they arise. Cash, securities, and surety bonds typically offer more flexibility and quicker access to funds. Cash is immediately available, securities can be sold or used as collateral quickly, and surety bonds provide a guarantee of payment, making them effective tools for managing liabilities.

By contrast, a Certificate of Deposit generally locks funds in for a fixed period, which can complicate the ability of a self-insured employer to respond swiftly to claims. This distinction is why the CD is not accepted as a form of security for incurred liabilities.