Workers' compensation, often referred to as workers' comp or workman's comp, is a type of business insurance and a Colorado state-mandated employer-held insurance program. It protects both your workers and business by providing benefits when employees suffer a job-related injury or illness.
There are two different types of coverage: Parts A (state-mandated) and B (employer's liability coverage).
Part A coverage refers to an insurance policy that protects employees under state laws. Coverage includes the following benefits when an employee is injured (or killed) while on the job in Colorado:
Under the course and scope rule, employees injured outside of the workplace can also be eligible for coverage. These exceptions include:
All compensation and benefits related to your state's workers' compensation laws are paid by your insurance company without regard to liability.
Premiums are based on your payroll and the types of duties employees perform.
Part B covers:
The type of injury determines how much an employee is paid. The most common injury types and limits are bodily injury by:
Unlike Part A, Part B also covers employees when you are liable through negligence. This is why it's referred to as employer's liability coverage.
Part B is not commonly held. However, when a family member or third party sues you, this coverage can save the day. This coverage can also be helpful when damages owed go above and beyond Part A coverage.
Workers' compensation insurance doesn't cover everything. Some things not covered include:
Injuries are covered, but may result in reduced compensation, when:
1. The injury is caused by alcohol or drugs, or
2. When the employee violates a known employer safety rule.
All businesses in Colorado that are not sole proprietorships with at least one employee must hold a workers' compensation policy. While nearly all employees must be covered, there are exceptions that include the following types of workers:
An employee or an employee's survivors are entitled to workers' compensation coverage Part A when that employee is injured, disabled, or dies while on the job. These benefits are typically awarded on a no-fault basis. The exception is if the employee was under the influence and the substance(s) contributed to the injury or death.
Following an on-the-job accident, the employee is usually required to submit to a drug and alcohol test. If a worker is injured or killed while on the job, many fatal incidents provide partial reimbursement of lost wages and survivor benefits.
Part A satisfies the state insurance requirements. This is because it funds employees' medical bills, related expenses, and lost wages when there is a covered loss. Payments, as a rule, are made based on predetermined schedules when there are defined injuries. An adjuster then calculates and pays out expenses accordingly.
With workers' comp, there are no policy limits. Under Part A, your insurer pays all benefits required by the workers' compensation law of any state listed in the declarations.
Employers, however, can be held responsible for payments made by your insurer that exceed regular workers' comp benefits. Such circumstances would include:
The Colorado Department of Labor and Employment (CDLE) has a graphic that explains exactly how the workers' comp claim process works. There are seven steps:
6. Medical care continues until the employee reaches maximum medical improvement (MMI)
7. You file a final admission within 30 days of the employee reaching MMI
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