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Colorado workers' compensation insurance: Your guide to requirements and getting a policy
If you’re a Colorado employer looking to protect both your business and your team, you’re in the right place. At Beyond, we provide the essential information you need to understand how workers’ compensation works and how to stay compliant.
Simply put, workers’ compensation covers medical expenses and provides partial income replacement for Colorado employees who are injured or become ill while on the job. There are benefits for employers as well: in many cases, companies are protected from litigation related to workplace injuries or illnesses due to workers’ compensation coverage.
Let’s discuss who needs this coverage and how companies can obtain it.
By law, all public and private employers in Colorado must provide workers’ compensation coverage if they have one or more full- or part-time employees. This includes workers who are family members. In Colorado, anyone hired to perform services for pay is presumed to be an employee.
Yes. According to the Colorado Department of Labor, certain workers may be exempt, including sole proprietors or general partners, corporate officers or LLC members, commission-based real estate agents and brokers, independent contractors, residential host-home service providers, railroad employees not covered by federal law, ski volunteers, and drivers under lease agreements with common carriers.
Everyone working on a construction site must be covered by workers’ compensation insurance. If you use contractors, make sure they meet workers’ compensation requirements; otherwise, fines may apply. The Colorado Department of Labor provides guidance on how to ensure each worker is properly covered.
You can require contractors to pay their share of the insurance premium. Obtain proof that every worker you directly engage with complies with workers’ compensation guidelines, which can be shown by:
Proof of workers’ compensation insurance
Proof of rejection of coverage
Employers have two primary options to obtain coverage:
1. Private Insurance Carrier
All workers’ comp insurance in Colorado is sold by private carriers; there is no state fund. Employers can shop around for quotes similarly to homeowners or auto insurance.
2. Self-Insurance
Employers may self-insure if they meet requirements, such as:
Being in business for at least five years (or a subsidiary of a company with that tenure)
Having at least 300 full-time Colorado employees or a parent company with assets exceeding $100 million
They must also demonstrate strong financial standing, including:
Excess insurance coverage
Security such as a surety bond
Claims management either internally or through a third-party administrator
Traditional Plans:
Premiums are estimated based on annual gross wages. Employers pay an upfront lump sum and possibly monthly or quarterly payments. At year-end, an audit adjusts the premium based on actual payroll.
Non-Traditional (Pay-As-You-Go) Plans:
Premiums are calculated and paid with each payroll, ensuring precise payment without upfront costs or year-end audits.
Learn more about pay-as-you-go workers’ compensation with Beyond.
Employers who fail to provide coverage may face a cease and desist order, forcing business operations to stop. Fines can be as high as $500 per day uninsured. If an employee is injured, the employer must pay the full claim cost plus an additional 25% penalty on the worker’s benefits.
Employees must notify their employer in writing within 10 working days of an on-the-job injury or illness. If notification is delayed, it should still be provided as soon as possible. Workers are also encouraged to report directly to the Colorado Division of Workers’ Compensation using the Workers’ Claim for Compensation form (WC 15).
Having the right workers’ compensation insurance is essential for protecting your employees and your business. Since employees are often your most valuable resource, prioritizing their safety is critical. Insurance coverage also protects employers from costly litigation, making compliance one less thing to worry about. Tools and services like Beyond can assist your company in obtaining and managing workers’ compensation coverage effectively.
