Types of Workers' Compensation Insurance in Colorado

Employers can obtain workers' comp coverage for their employees in one of three ways

With the exception of very limited circumstances, employers in Colorado are required to maintain a current workers' compensation insurance or self-insurance policy for their employees.

They are by law prohibited from garnishing worker wages to pay for it and cannot demand an employee pay anything to have their work injury treated... premiums and all costs are the sole responsibility of the employer.

There are 3 ways your employer can obtain workers' compensation insurance in Colorado and comply with the letter and the spirit of the law. It's important to understand how your employer chooses to fulfill this important obligation.

Continue reading to learn more about these three different types of workers' compensation insurance your employer can choose from to be in compliance with Colorado laws.

Pinnacol Assurance – Colorado's workers' compensation insurer of last resort

One of the ways your employer can obtain workers' compensation coverage and comply with Colorado laws is to apply for and pay premiums for coverage through Pinnacol Assurance, the state's insurer of last resort.

In fact, a majority of employers in the state rely on Pinnacol to cover their workers against any unforeseen on-the-job injuries. According to the most recent data from the firm, over 57% of employers or around 1.5 million employees are covered this way.

Employers are only required to pay insurance premiums to the company for coverage only. In the event of an on-the-job injury, Pinnacol is liable for any medical treatment and workers' compensation benefit payments.

Private Corporation or mutual company licensed to offer workers' compensation insurance in Colorado

The second option your employer could choose to comply with Colorado's workers' compensation laws is to apply for and pay premiums to a private insurance company that is authorized to write policies for workers' compensation in Colorado. The process for obtaining coverage is roughly the same as it is for Pinnacol.

If your employer chooses this route, they must notify the Colorado workers' compensation agency and provide the insurer's name and address, the policy's effective date and its expiration date. The agency may require they submit a copy of the insurance contract or policy.

Obtaining workers' compensation coverage through a private insurer does relieve the employer of certain reporting requirement – namely, employers are not responsible for delays in reporting an injury to the insurance company or bad faith claims.


Self insurance is the third option employers in Colorado can use to cover their employees who essentially act as their own insurance company with the approval of the Colorado Department of Labor and Employment. This agency may require a surety bond in the event the company defaults and is unable to pay its workers' comp claims.

Only larger companies with at least 300 full-time employees can choose to insure themselves. Two or more employers in the same industry can create their own self-insurance "pool" but they must still have at least 300 employees. When applying to the state for permission, they will need to submit a written proposal outlining the plan's administration, claims adjusting, membership, re-insurance, capitalization and risk-management of the pool.

Once a company gains approval to cover their own employees, they will have to file an accounting of assets, liabilities, business transactions and money reserves to the state insurance commissioner by March 30 th of every year.

And while the executive director of the Labor agency can grant approval for self-insurance, he can take it away as well. This can happen for the following reasons:

•  Insolvency

•  Failure to provide an annual report

•  Failure to comply with rules and conditions set forth by the state

If an employer loses the authorization to carry their own self-insurance policy, they will need to obtain a workers' compensation insurance policy through one the two options mentioned above.

Understanding how your employer provides workers' compensation coverage can be a valuable tool in ensuring you are properly compensated for any unforeseen on-the-job injuries.

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