Colorado Workers’ Compensation Insurance: Providers, Rules & More

Colorado workers’ compensation insurance requires that any employer with one or more employees must maintain a policy that pays medical expenses and partial wage-replacement for injuries on the job. Colorado small businesses should expect to pay an average of 95 cents per $100 of payroll for workers’ comp. Rates vary extensively based on job duties and carriers.

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Colorado Workers’ Compensation Insurance Providers

Colorado workers’ compensation insurance is purchased through private insurance companies or the state insurance fund. Very large companies can also self-insure themselves. When shopping for coverage, look for top workers’ compensation companies that understand your business needs and risk. Policies are priced more favorably when a company is most comfortable insuring that type of risk.

Top Colorado Workers’ Compensation Insurance Companies

Here are the top five Colorado workers’ compensation insurance companies.

The Hartford

An industry leader for commercial insurance products, The Hartford prides itself on being a partner to small businesses. This means they look at the practical risk of business owners and build policies based on what real business concerns are. The Hartford’s workers’ compensation insurance policies are centered on a business-centric claims process.

The Hartford works with businesses of all types and sizes. The small business with less than 50 employees and is also considered a low-to-mid level hazard industry will find the best rates here. Convenience is another big factor for businesses that want to have all lines of commercial insurance in one place. The Hartford covers it all.

Pinnacol Assurance

Pinnacol Assurance was originally known as the State Compensation Insurance Fund, a state agency started in 1915 by The Workers’ Compensation Act. This Colorado agency filed to transition into a quasi-public authority in 1987. This is a workers’ compensation carrier that works with companies of all sizes and industries to ensure fair pricing and policy issuance.

Pinnacol Assurance is competitive in workers’ compensation insurance for most businesses but best serves businesses with high-risk or loss concerns. Pinnacol Assurance is a good fit for companies that might be ineligible with another carrier, has high rates due to work classification, or loss history.

Rockwood Casualty

Rockwood Casualty is part of the Argo Group, an international insurance carrier catering to specialty business industries. Along with standard risks, Rockwood is known to work with higher-hazard accounts. It writes a full line of commercial insurance including specialty needs like pollution liability.

Businesses that work in the mining, drilling and commercial development spaces are best suited to find competitive pricing with Rockwood Casualty. The company understands the unique risks and offers all lines of commercial insurance including comprehensive workers’ compensation insurance policies.

Travelers Group

The largest provider for workers’ compensation insurance in the country, Travelers Group writes most risks and provides extensive coverage beyond state borders. With a full line of commercial insurance, Travelers Groups is capable of handling companies of all sizes fitting into a range of risk classes.

Travelers Group is the best choice for small businesses with a mobile workforce or secondary office out of state or country. While this carrier works with all business sizes and most all business industries, they are most competitive with larger companies that have more than 50 employees.

Liberty Mutual

Liberty Mutual is a national carrier most known for personal lines of insurance but has a diverse commercial lines department. Local offices help Liberty Mutual become part of a community to work with companies and build safer work environments.

Liberty Mutual is the best commercial insurance carrier for small business owners who are busy running their business and don’t want to get bogged down in extended underwriting processes. Local agents give local businesses a partner to do the leg work in underwriting. Small service providers and administrative companies find very competitive workers’ compensation rates with Liberty.

What Workers’ Compensation Insurance Is

Workers’ compensation is a special liability insurance that covers employees who are injured or ill from job-related duties. Policies pay medical expenses and cover the employee’s weekly wages through the recovery period. Depending on workers’ compensation state requirements, coverage can also include long-term disability settlements or burial costs for more extreme situations.

Workers’ compensation insurance usually has limits of $1 million per incident with a $2 million aggregate. This means if several workers are injured during the same work accident or within the year, the policy only pays each person a maximum of $1 million and no more than $2 million for all claims combined. Claims exceeding aggregates could be subject to civil lawsuits.

Colorado Workers’ Compensation Insurance Laws

Colorado is considered a no-fault state when it comes to workers’ compensation insurance. This means that carelessness on the part of the employee and negligence on the part of the employer are still covered scenarios. Unless activities leading to claims are willful or illegal, the workers’ compensation policy covers the injured worker.

Full- and part-time employees must be covered before they clock in on the first day. If you hire an independent contractor, request a certificate of insurance (COI) that shows he has the proper coverage for himself.

Colorado statutes allow employers to obtain workers’ compensation through either:

• State insurance fund: Pinnacol Insurance is the state fund that competes with private commercial insurance carriers
• Commercial insurance carriers: Colorado small businesses can opt to use one of over 500 private commercial insurance carriers for workers’ compensation
• Individual self-funding: Employers meeting permit requirements with a minimum of $100 million in assets are eligible for self-insurance
• Group self-funding: Administered through the Division of Regulatory Agencies, companies in similar industries can obtain coverage through a group pool

All employers and employees are subject to the same rules and regulations for coverage regardless of which workers’ compensation policy provider you choose.

Colorado Workers’ Compensation Insurance Exemptions

Colorado requires all employers to maintain workers’ compensation insurance for all full- and part-time employees with a few available exemptions. If you have workers in an exempt class, you are not required to maintain workers’ compensation insurance on them.

The exemptions for Colorado workers’ compensation insurance are:

• Licensed real estate agents or brokers working on commission
• Independent contractors performing specific work-for-hire duties
• Certain maintenance or repair workers with less than $2,000 in annual wages
• Certain domestic work for private homeowners working part-time
• Volunteers services or time for ski area operator

If you feel you are exempt but not listed in these bullets, contact the Division of Workers’ Compensation for confirmation and exemption filing.

Colorado Workers’ Compensation Insurance Rules for Construction Companies

Colorado construction companies are subject to special requirements. Colorado law requires anyone working on a construction site have workers’ compensation insurance. Independent contractors must show general contractors proof of insurance otherwise the general contractor must maintain coverage. Failure to confirm coverage of hired contractors results in fines up to $500 per day.

The only workers’ compensation insurance exceptions for the construction industry are:

• Corporate officers with a minimum of 10% share ownership
• Limited liability company (LLC) members with a minimum of 10% share ownership
• Sole proprietors with a registered trade name
• Partners in a registered partnership with the secretary of state

Self-employed individuals and independent contractors can purchase workers’ compensation insurance policies for themselves. Even if it isn’t required by a general contractor or employer, it still provides necessary coverage if a self-employed person gets hurt on the job.

Colorado Workers’ Compensation State Fund: Pinnacol Assurance

Pinnacol Assurance was once a state agency but has evolved into a domestic mutual insurance company providing workers’ compensation insurance to Colorado employers. Employers are not required to use the state fund but may get more favorable rates with the state carrier. Pinnacol can offer multiple business insurance lines making it a convenient competitive state fund.

For high-risk businesses or businesses with larger payroll costs, workers’ compensation can be a financial burden. Pinnacol Assurance has a range of discounts that apply to businesses paying more than $10,000 in standard premium as well as businesses that have implemented safety programs and maintain positive safety records.

Colorado Workers’ Compensation Insurance Costs

Workers’ compensation insurance rates use several factors to determine costs including payroll, work class, and the experience modification rate (EMR) plus its own internal underwriting systems. Colorado average premium is 95 cents per $100 of payroll. Understanding this formula gives Colorado businesses estimates for worker’s compensation insurance costs.

This formula is the base standard companies use for workers’ compensation insurance rates:

Premium = Classification code rate x EMR x Payroll per $100

As an example, let’s look at a hair salon in Aurora with four stylists and a receptionist. If the stylists rent their chairs, they are independent contractors not covered by the hair salon owner. The receptionist is an employee who makes $35,000 annually. If the class code is 29 cents, then the annual premium estimate is $101.50, though carriers may have a minimum policy premium.

Colorado Workers’ Compensation Rate Variations

Colorado Workers’ Compensation Insurance Rate Appeals

The state of Colorado allows small business owners to file an appeal regarding job classification or experience modification. A written appeal regarding carrier pricing must be sent to the Workers’ Compensation Classification Appeals Board. A hearing will be held where businesses can present their case with legal representation if desired. Rendered written notices are final.

Colorado Workers’ Compensation Audit Requirements

Workers’ compensation premium audits are required by every carrier as you approach renewal. Policies are started with payroll estimates. Workers’ compensation insurance companies must reconcile the estimated numbers with the actual payroll. Overpayments are refunded, and underpayments are billed. The audit is imperative to continuing workers’ compensation coverage.

Common payroll adjustments happen due to overtime, cutting hours, hiring, or firing people. The audit is also used to determine the renewal premium, considering the actual payroll and defining the EMR based on claims during the year.

Colorado Workers’ Compensation Insurance Deadlines

Colorado law states that employers must have viable workers’ compensation insurance before the first employee punches in. According to the Colorado Department of Labor and Employment, employers who fail to get coverage are charged $250 per day. Penalties go up to $500 per day with the closure of the business for subsequent failures to comply.

Some Colorado workers’ compensation insurance deadlines include:

• Employer’s first report of injury: Complete this form within 10 days, filing it with the insurance company
• Responsibility of injured worker: Must inform the employer within four days of the incident; penalties or claim denial may apply for failure to do so
• Notice of fatality or multiple injuries: Incidents and accidents with a fatality or where three or more employees are injured must be reported immediately upon learning of the incident

What Colorado Workers’ Compensation Insurance Covers

Colorado workers’ compensation insurance covers all costs associated with work-related injuries. Insurance companies manage the claim on behalf of the employer and pay medical and rehabilitation expenses along with lost wages to the injured party. Without adequate workers’ compensation coverage, employers are subject to expensive civil lawsuits.

Key coverage components of workers’ compensation policies are:

• Medical expenses: Pays costs associated with emergency responders, hospital visits, surgeries, and diagnostic tests
• Rehabilitation expenses: Pays expenses related to physical therapy and rehabilitation from an injury after initial medical treatments
• Occupational therapy: Could pay occupational therapy services to retrain employees for new job skills if they are unable to return to the same job
• Long-term disability: Pays settlement for injuries resulting in long-term disability and permanent damage or scaring
• Beneficiary expenses: Provides beneficiaries with financial payments for burial expenses and potential settlement payments based on the loss of a loved one who dies as a result of work injuries
• Wages while out injured: Pays up to two-thirds of weekly wages to injured employee often combined with disability insurance
• Employer liability: Pays legal and administrative costs associated with any liability claims and lawsuits fighting fraudulent workers’ comp claims

Although Colorado is a no-fault workers’ compensation state, there are incidents not covered by workers’ compensation policies. An employer’s coverage is denied if the employer is willfully violating safety rules and laws. Employees may get claims denied for intentional self-inflicted wounds or performing illegal actions or willfully violating safety procedures.

How to File a Colorado Workers’ Compensation Insurance Claim

When an employee gets hurt, it is imperative that everyone follows protocol. This protects both the rights of the employee and also the rights of the employer. Failure to follow protocol in filing the claim can result in injured workers forfeiting the claim or employers being subject to civil penalties and lawsuits.

The steps to file a Colorado workers’ compensation insurance claim include:

1. Employee seeks medical attention and notifies the employer of the incident causing injury within four days.
2. Employer calls insurance company within 10 days to file a claim.
3. Insurance company coordinates with the injured worker for continued medical care and average weekly wages benefits.
4. Insurer notifies the Division of Workers’ Compensation with an admission or denial letter within 20 days.

These timelines are subject to change based on various factors. A fatal injury requires immediate attention while a work-borne illness has up two years to be filed as a claim.

Tips on Getting Colorado Workers’ Compensation

Use these tips when shopping and buying Colorado workers’ compensation insurance:

Confirm the Various Employee Classifications

Most businesses don’t have just one employee classification. Make sure the office workers are classified properly compared to field workers. The person doing physical labor is classified at a higher rate than the person confirming appointments on the phone. Review the workload of each employee to determine the class code for a premium rating.

Talk to Other Employers Near You

Ask your fellow small business owners who they use and whether or not they like them. Getting first-hand experience from another company who may have had a claim is a valuable insight into deciding whether or not to trust your employees’ health and your company’s financial strength to them. A great rate does nothing if a claim isn’t properly managed.

Shop Around for Premium Quotes

Don’t wait until your policy expires to shop for rates. Once you receive the audit notice, this is your cue to review the existing policy, provide your carrier with the updated payroll information and then use that to shop for new carriers. This should be done two to three months before the policy renews or expires.

Talk to Your Agent or Broker About Alternatives

Most small business owners aren’t eligible for individual self-insurance but, with more than 500 carriers, pools, and the state fund, there are many Colorado workers’ compensation options. Don’t hesitate to explore different options to help save on the costs of workers’ compensation insurance.

Colorado Workers’ Compensation Frequently Asked Questions (FAQs)

You may still have questions. We understand because workers’ compensation insurance is complicated. Need more answers? Visit our forum or leave a comment below. Making sure Colorado business owners have the right answers are our top priority.

How are workers’ compensation payments calculated?

Calculate the average weekly wage (AWW) in one of three ways. Monthly wage times 12 divided by 52 weeks in the year. Daily rate times five days in the week. Hourly rate time the average number of hours worked weekly, often 40 hours. Take any of these weekly numbers and multiply it by two-thirds to determine the workers’ compensation weekly rate.

What Is the maximum wage benefit for Colorado workers’ compensation?

As of July 1, 2017, the maximum AWW paid by workers’ compensation insurance in Colorado is $948.15. Benefits continue until you can return to your job full-time, your doctor approves a modified job with accommodation made at work, or you are deemed unable to return to work with a “maximum medical improvement.”

3. Are there penalties for not having workers’ compensation insurance?

Workers’ compensation insurance is required by Colorado law for all employers and full- or part-time employees. Reports of noncompliance to these regulations can result in penalties of $250 per day for the first violation and $500 per day for subsequent violations. A business cease and desist is issued, and the employer is liable for all injuries.

The Bottom Line

A small business owner with employees in Colorado has no choice but to carry workers’ compensation insurance. Getting the right coverage not only protects employees but protects small business owners from civil lawsuits for uncovered medical expenses, prescriptions and rehabilitation services for employees hurt at work.

Don’t hesitate on getting a workers’ compensation insurance quote because it seems overwhelming. The Hartford has been working with small business owners just like you for more than 150 years. Visit it online to get a quick quote that is ready to start your coverage the second you submit it.

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