What is workers' compensation insurance?

Workers' compensation insurance, also known as workers' comp, protects employees who suffer a workplace injury or illness and their employers.

Policies vary by state, but most provide medical and lost wages benefits to workers injured on the job and protect business owners from legal action.

Why do we have workers' comp?

The idea of workers' comp is not new—in fact, workers' comp has been around since ancient Sumer in 2050 BC.

Workers' comp came to be in modern times when the Federal Employers' Liability Act was enacted in 1908 to protect railroad employees.

Colorado created workers' compensation laws early through the Colorado Workers' Compensation Act in 1915. By 1948, a workers' compensation law, in one version or another, was adopted by all states.

In the great state of Colorado, our workers' comp system is overseen by The Colorado Division of Workers' Compensation (DOWC).

How does workers' compensation protect employers and employees?

Workers' compensation insurance is good business for both employers and their employees.

For employers, it decreases the risk of costly lawsuits and medical bills after an employee is in a serious accident. Such expenses are especially crucial to avoid for small businesses.

For employees, the risk of losing wages, crippling medical costs, and legal fees is greatly decreased because of workers' compensation coverage.

What does workers' comp cover?

In Colorado, workers' comp insurance covers:

  • Employee medical treatment and care
  • Lost wages
  • Disability benefits
  • Disability expenses
  • Ongoing medical care
  • Mileage and parking related to medical visits and picking up medications and supplies related to the injury (Reimbursement)

What injuries aren't covered by workers' compensation?

Colorado workers' comp does not cover all injuries. Employees are not covered when the workers:

  • Injure themselves on purpose.
  • Are injured while engaged in a social or athletic event that wasn't considered work-related duties.
  • Engage in rowdy or foolish behavior with each other.
  • Was injured by an act of God (Including exceptions for employees exposed to increased risk due to job functions).

It's possible for reduction or termination of benefits under the following circumstances:

  • Intoxication with alcohol or unauthorized drugs
  • Willful failure to use a safety device
  • Willful failure of the worker to obey a reasonable, communicated and consistently enforced safety rule
  • Injured after an employee intentionally mislead an employer about their ability to perform a job
  • Child support judgment

Who is required to have workers' comp coverage?

Each state and territory have some form of workers' compensation board that governs workers' comp in its state.

Colorado law requires all businesses with at least one full-time or part-time employee to have a workers' compensation policy.

There are exemptions, however, which include:

  • Sole proprietorships
  • Independent contractors with no employees
  • Drivers working for a contract carrier
  • Real estate agents and brokers paid by commission
  • Part-time private domestic and maintenance or repair workers
  • Casual maintenance or repair workers who earn less than $2,000 per calendar year
  • Volunteers

Corporate officers and members of LLCs who own at least 10 percent of the business may also exclude themselves from coverage.

Colorado has additional requirements for the construction industry.

Businesses receive fines when they do not carry the necessary insurance.

How is the cost of workers' compensation insurance determined?

Colorado workers' compensation costs vary depending on your business and carrier savings offered and more.

Several factors go into calculating the cost, such as the industry type and annual payroll. Companies with low accident rates will also have a lower experience modifier (e-mod), which helps lower premiums.

To calculate Colorado workers comp numbers, the Division of Workers' Compensation provides multiple calculators to help employers calculate the weekly wage, TTD, interest, offset, and more.

How do I get workers' compensation insurance?

Protecting your business and your workers can be a challenge. Why not work with the workers' comp partner who has been helping employers for more than 100 years?

No matter what your company's size is, Pinnacol Assurance provides your business with not only reliable coverage but also free:

  • Injured worker support
  • Return to work programs
  • Safety services

Go online or connect with an agent partner to see if Pinnacol Assurance is right for you.

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Key Takeaways

How does workers’ comp work?
(and other FAQs)

How does workers' comp work?
This is dependent on multiple factors, such as industry, claims history, risk, and other factors.
How much does workers' comp cost?
This is dependent on multiple factors, such as industry, claims history, risk, and other factors.
How should I respond to an injury at work?
This is dependent on multiple factors, such as industry, claims history, risk, and other factors.
More workers' compensation FAQs