Workers’ Comp Insurance in Colorado

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The State of Colorado requires workers’ compensation coverage for every employer with one or more full or part-time worker. Colorado workers compensation insurance has few exceptions and covers public and private employers. The law provides authority to levy fines and impose penalties for non-compliance.

Colorado enacted the Uninsured Employer act in 2017 to protect employees of uninsured or underinsured employers. The law provides funds to pay employees for insufficiency in employer coverage. The new provisions empower the state to collect funds from delinquent employers.

Why Do You Need Workers Comp Insurance?

The concept of workers’ compensation is a quid pro quo; the worker gives up a right to sue an employer for any workplace injury or work-related illness, and the employer agrees to promptly pay medical expenses and an agreed share of any lost wages during disability.

Employers and employees benefit from the system that promotes worker health and well-being while at the same time granting employers relief from civil liability. The Colorado government can fine employers $250 per day per employee for failing to get and keep adequate insurance. The state can issue cease and desist orders and shut-down businesses that do not get insurance after warnings.

Buying Workers Comp Insurance in Colorado

Employers can get workers’ compensation coverage in three ways. They can purchase private insurance, self-insure, or join a group of self-insured employers. The numbered items below describe the major options for getting employer workers’ comp coverage.

  • 1

    Private Insurance

    State licensed private insurance companies, agents, and brokers provide access to information and insurance coverage for Colorado employers. Pinnacol Assurance is the Colorado insurer of last resort; it is a state assisted entity. All employers get guaranteed coverage when they pay the required fees.

  • 2

    Self-Insurance

    Companies may qualify for self -insurance if their plans demonstrate financial responsibility and meet strict requirements like size of workforce and standing in the business community.

  • 3

    Group Self-Insurance

    Companies in the same or similar industries can pool their liabilities for coverage in a group plan. They can cover all or substantially all of their liability and use private contracts for excess liability. Group self-insurance requires a plan, an application, and auditable proof of financial strength.

Instructions for Buying Colorado Workers Compensation Insurance

Employers can purchase private coverage from insurers, agents, or brokers. They can buy coverage from Pinnacol if no private company covers them. Large and well-financed companies can self-insure individually or in groups or pools.

Private insurance is the best option for many firms. Colorado enjoys a low average cost of insurance. The exact charges for an employer depend in part on the assortment of occupational categories used in the employer’s operations.

To self-insure, they must get permission and post a security bond if required. The oversight process in Colorado permits discretion by the government when deciding to grant self-insurance. They review the applicant’s plan and add any further requirement deemed necessary based on information in the plan.

If the self-insurance proposal is not sufficient, then the government rejects the application. The government leaves the employer to Pinnacol or the private sector for coverage. The approval for self-insurance will lapse when the employer fails to meet its obligations.

The on-going responsibilities for self-insurance include annual reports and proof of continuing financial responsibility. The state maintains a monthly list published in print and online of self-insured firms and their current status. Once removed from self-insurance, the employer must immediately purchase coverage from Pinnacol or the private sector providers.

Things Employers should know about Worker’s Comp in Colorado

The State emphasizes coverage and worker protection. It enacted new laws in 2017 to protect workers caught in shortfalls due to uninsured or under-insured employers. The state government is active in enforcement and has imposed large fines on businesses that failed to get and keep adequate coverage.

Is your business required to carry?

There are few exemptions in Colorado law for workers’ comp insurance coverage. The state imposes penalties, and while the minimum is $250 per day, some companies have gotten penalties near $1 million.

How much does worker’s comp insurance cost?

The average cost of workers’ compensation insurance in Colorado is $0.95 per $100 in earnings. This rate is among the lower rates in the US. It compares well with California at about $2.75 per $100 earnings.

Cost of not getting worker’s comp insurance

Uninsured employers in Colorado pay penalties and face administrative action to shut down their operations until they comply. In 2017, a few publicized cases involved large fines that effectively caused the businesses to shut down. The state also enacted a new law to provide funds to protect workers with uninsured employers.

List of places for worker’s comp or more info

Employers can get information on workers compensation coverage from private insurance companies, licensed brokers, and agents. They can arrange insurance or help a company search for terms and coverage.

Employers can get information and assistance from the Colorado Government, Department of Labor and Employment, Workers Compensation Division. (Division of Workers’ Compensation | 303-318-8700)

Employers interested in self-insurance must get approval. They can contact the Executive Director of the Department of Labor and Employment. Self-insured firms must meet the below listed requirements.

  • Must have been in business continuously for five years or more
  • Must have 300 or more full-time employees in Colorado
  • Demonstrate strong financial position by audited statements
  • Show favorable debt to equity ratio
  • Maintain competent claims adjustment capacity on staff or contract

Factors that Impact Coverage

The employer pays rates based on employer-specific factors including the types of occupations it employs, and the record of injuries. Employers that experience frequent and severe injuries will pay more.

Legal

The employer must maintain a safe workplace. The employer must also meet the requirements of any other state in which it sends employees to work.

Liability

workers compensation does not relieve the employer completely of responsibility for the working conditions of premises or other places involving work.

Rates

Employers can reduce their premiums by as much as 10 percent by maintaining a worker safety program approved by the Premium Cost Containment Board.

Division of Workers’ Compensation
633 17th Street, Suite 400
Denver, CO 80202-3626
303-318-8700 (Metro Area)
303-318-8710 (Fax)
1-888-390-7936 (Toll-Free)
cdle_workers_compensation@state.co.us

Helpful Tips

Employers must post required notices for employees. These posters are quite important as they prove notice to employees of their rights under the Workers‘ Compensation laws. The responsibility for maintaining a safe and accident-free workplace remains with the employer. Promoting safety is the best way to control insurance costs while protecting workers from work-related illness or injury.

Conclusion

Workers’Compensation is a vital part of every employer’s duties under Colorado law. Employees can rely on the protection for their medical expenses and a large portion of lost wages. The law encourages workplace safety because employers must pay more if they have a modified history of frequent or severe workplace injuries or work-related illnesses.

Sources:

  • Guide for Self Insurance
    https://www.colorado.gov/pacific/sites/default/files/Self_Insurance_for_Employers.pdf

  • State of Colorado, Department of Labor
    https://www.colorado.gov/pacific/cdle/injured-workers

  • Colorado General Assembly- HB 17-1119
    https://leg.colorado.gov/bills/hb17-1119