Colorado workers' compensation insurance

In Colorado, workers’ comp insurance is required for all employees of public or private businesses. Generally, any person who performs work or services is presumed to be an employee.

There are a few exceptions when establishing whether workers’ compensation coverage is mandatory in Colorado for your business. A sole proprietor or any general working partner, corporate officer, or member of a limited liability company (LLC) might not be bound to carry this insurance under certain circumstances.

If you are self-employed, you do not need workers’ compensation, but you should still consider buying it. Sole proprietors, independent contractors, and business partners are not considered employees, so they don't fall within the state's requirements for this policy.

Given the high cost of medical care, buying workers' comp is often a smart business decision even when it's not required. It could provide coverage for lost wages and other important benefits if a workplace injury occurs.

Additionally, here's what your workers' comp policy won't cover:

• Injuries caused by intoxication, drugs, or company policy violations
• Injuries claimed after a firing or layoff
• Wages for a replacement worker
• Occupational Safety and Health Administration (OSHA) fines

Employers in Colorado have several options when it comes to buying workers' compensation insurance:

You can purchase workers’ comp from an authorized commercial insurance company. Insureon provides an easy online application to compare quotes from top insurance carriers and licensed agents with expertise in insurance for Colorado businesses.

Larger businesses can opt for self-insurance. Employers must have at least 300 employees or $100 million in assets to qualify for self-insurance. Public sector employers and professional associations may join a group or pool for workers’ compensation insurance through a program administered by the Division of Insurance in the Department of Regulatory Agencies.

You can buy insurance through Colorado's state fund. Colorado runs a competitive workers' compensation state fund administered by Pinnacol Assurance.

Insurance providers use a specific formula for calculating workers' comp premiums:

To save money on workers' comp insurance, it's important to make sure you classify your employees correctly. Employees with desk jobs or other jobs with a low risk of injury cost less to insure. This also helps you avoid misclassification fines.

In some cases, small business owners can choose to buy pay-as-you-go workers' compensation. This type of workers' comp policy has a low upfront premium, and lets you make payments based on your actual payroll instead of an estimated payroll. It's useful for businesses that hire seasonal help or have fluctuating numbers of employees.

A ghost policy is a cheap option in some states, though not permitted in Colorado. A ghost policy is a workers' comp policy in name only. It provides no protection, but can fulfill contractual requirements for a workers' comp certificate at a reduced price.

Finally, a documented safety program can help lower workers' comp costs. A safer workplace means fewer accidents, which helps keep your premium low.

Workers’ compensation insurance benefits both the employer and the employee. Its purpose is to provide employees with necessary medical treatment and wage replacement if an individual is injured on the job. Additionally, it supplies death benefits in the event of an employee fatality.

Workers' comp protects employers due to the exclusive remedy, which prevents an employee who accepts workers' compensation benefits from suing their employer for the injury. Most policies include employer's liability insurance, which helps cover legal expenses if an employee does sue the employer over their injury.

The Colorado Division of Workers’ Compensation enforces compliance with workers’ compensation requirements, provides information to both employers and employees, assists in the resolution of related issues, and administers self-insurance programs.

In Colorado, an employee who is injured on the job or develops an occupational disease receives workers' comp benefits that cover the entire cost of their medical treatment during recovery.

The amount a worker can receive for temporary disability and permanent partial disability benefits is limited once they've fully recovered or reached maximum medical improvement (MMI). The limit depends on the impairment rating that a doctor assigns the worker for their injury.

For example, an employee might not recover full use of their arm after a work injury. Once they've recovered as much as possible, their doctor assigns them an impairment rating that reflects the severity of the impairment. The insurance company then uses that rating to determine whether the employee will receive future benefits, and if so, how much.

The penalties for not carrying workers’ compensation insurance in Colorado could include steep fines. If a business is determined to be lacking proper coverage, the director of the Division of Workers’ Compensation may issue a cease and desist order against the business, which would require it to stop all operations until it obtains proper insurance.

Uninsured employers may have to pay fines of up to $250 for each day they did not maintain insurance coverage. If there are multiple violations, that fine could go as high as $500 per day.

If there is a workers’ compensation settlement before the penalty, the benefits would be increased by 50% if the employer failed to maintain insurance.

An injured worker will usually be offered a workers’ compensation settlement. If accepted, the worker will receive a lump sum payment and avoid the uncertainty of a workers’ comp hearing. With a settlement, the employee also forfeits the right to additional disability benefits.

Occasionally, the insurer will agree to a limited settlement that would allow for the worker to maintain the right to future medical benefits. A structured settlement is an option that would allow the worker to receive payments as installments over a period of time, so the payments would be issued monthly or yearly.

If the worker is owed permanent disability benefits, it could be paid as a lump sum. However, if that happens, the insurance company would pay the present value of the benefits, which is discounted by 4% each year. Colorado also maintains a cap for how much a lump sum can be, and that amount changes each year.

Usually, a worker will wait to settle a workers’ comp claim until they have reached maximum medical improvement, which means their condition is stable and will not require additional medical treatment.

An injured employee should file a workers’ compensation claim as soon as possible. The claim can only be filed for up to two years following the diagnosis of injury or illness. However, if the employee misses at least three days of work, the employer is required to file a report of injury, and the statute of limitations deadline is established.

If an employee is injured on the job, they are required to report the injury to the employer in writing within four working days. This written notice should either go to the employee’s direct supervisor or the human resources department.

If the injury is an ongoing issue (like carpal tunnel syndrome) and not the result of a specific incident, the statute of limitations begins when the employee knew or should have known that there was a medical condition caused by employment.

The dependents of a worker who died as a result of work-related illness or injury have two years to file a claim petition for death benefits.

If you're ready to buy a workers' compensation policy, start a free application with Insureon to compare quotes from top-rated insurance carriers. A licensed insurance agent will help answer your questions and explain your coverage options. Once you find the right policy, you can usually begin coverage and get your certificate of insurance in less than 24 hours.