Colorado Workers' Compensation Insurance

Colorado requires all employers to carry workers’ compensation insurance, with few exceptions. The state has been dealing with similar issues as other states, including opioid abuse, mental health benefits and gig economy workers.

You are required to carry workers' compensation insurance in Colorado if:

• You have any employees working in Colorado, even part-time.
• You hire any workers, even if not employees. Common law guidelines distinguish independent contractors from employees, but Colorado is strict on this front: Subcontractors and independent contractors may be considered employees unless they fall under specific exceptions in the state law.

The state has a strict workers’ compensation system, with few exceptions.

Sole Proprietors and Partners

You are excluded from coverage, but have the option to include yourself.

Corporate Officers and Members of an LLC

Colorado includes you in coverage, but if own at least 10% of the company you can opt out of coverage. A rejection of work comp benefits must be done in writing.

Domestic Workers

Some domestic and maintenance workers that perform work on a limited, part-time basis for a homeowner may not need to be covered by law.

Colorado workers’ compensation rates are recommended by the National Council on Compensation Insurance (NCCI), which most states use as their rating bureau. NCCI collects data on workplace injuries and advises rates based on class code, or industry classification.

Small business owners can contact a licensed commercial insurance agent or carrier to buy workers' compensation coverage. The insurance carrier calculates the final premium cost based on the set rate, the company’s payroll and its Experience Modifier. 

The Colorado state legislature has made several recent changes to the work comp system. These include:

• Created a voluntary benefits program for firefighters diagnosed with cancer.
• Penalty money collected by the division will fund benefits to the injured workers of uninsured employers.
• Expanded cases where workers can receive benefits for a PTSD diagnosis.

How to address opioid abuse, and workers’ compensation benefits for “gig economy workers,” such as Uber drivers, have also been recent topics of debate.

Tip: General liability and workers’ compensation insurance are the two most basic insurance policies that every business should have, but they’re often confused. Learn more about general liability >>

• Workers’ compensation regulation: Department of Labor & Employment, Division of Workers’ Compensation
• Rating bureau: NCCI (National Council on Compensation Insurance)
• State fund: Pinnacol Assurance