Employer

Did You Know That...

• failure to insure could cost you up to $500.00 per day and 1 ½ times the amount of compensation ordered paid on a claim?

• no portion of the premium may be deducted from an employee’s wages?

• there are 3 ways to finance workers’ compensation risk?
   

• some employers may benefit by self-insurance?
   

• some employers should not consider self-insuring?

• failure to insure could cost you up to $500.00 per day and 1 ½ times the amount of compensation ordered paid on a claim?

The Division of Workers' Compensation investigates all information
received or discovered about employers who may be uninsured for
workers' compensation. If an employer fails, neglects or refuses to obtain
workers' compensation insurance as required by law, the Director of the
Division is authorized to assess fines of up to $250.00 per day for the first
violation and up to $500.00 per day for a second or any subsequent violation.
In addition, a cease and desist order may also be issued against the
business to stop business operations until insurance is obtained.

The Colorado Workers' Compensation Act does not provide a fund to
cover the medical expenses or lost wages of employees injured while
working for uninsured employers. Employers have sole responsibility to
provide insurance. If unlawfully uninsured at the time of an injury, the
employer must pay all statutory medical and disability benefits for the
injured employee and an additional 50% of all temporary, permanent and
disfigurement benefits for having been uninsured.

For additional employer information, request a copy of the Employer’s Guide or access the information via the division website by clicking on:
Guide for Employers

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• no portion of the premium maybe deducted from an employee’s wages?

Workers’ compensation insurance coverage is paid by the employer.  In Colorado there is currently no recognized form of alternative coverage that can be used instead of workers’ compensation coverage.

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• there are 3 ways to finance workers’ compensation risk?

  The employer must bear the cost for workers’ compensation.  There are three general ways in which an employer may cover this risk.  While not all states or jurisdictions allow all three methods, most allow a combination of the following:

• Commercial Insurance
• Insurance Enabled by Statute
• Self-Funding or Self-Insurance

The state of Colorado allows coverage by all three methods:

• Commercial Carriers

Commercial insurance for workers’ compensation may be purchased from over three hundred carriers authorized to conduct such business in the state of Colorado. Consumers of commercial insurance often have cost advantages over prevailing insurance rates by innovative cost-plus and cash flow plans that are available to select customers and “package deals” wherein other coverages are discounted for the inclusion of the workers’ compensation business.  Changes in the laws and the market may result in fluctuations in the types of plans that are offered and in the availability of coverage from year-to-year.  Commercial carriers may endorse “all states” coverage.

• Insurance Enabled By Statute

Pinnacol Assurance is enabled by statute.  Pinnacol is the largest carrier of workers’ compensation in the State of Colorado.  It offers the full range of services that may be expected from a commercial carrier.  Coverage from Pinnacol is readily available and a premium discount is offered.  Pinnacol Assurance coverage is restricted to claims occurring under Title 8 Articles 40 to 47, Colorado Revised Statutes, exclusively.

• Self-Insurance

Colorado workers’ compensation statutes allow for employers, meeting rigid financial and loss control standards, to self-insure (self-fund) this risk.  By special permit, workers’ compensation obligations are paid directly from earnings and assets of the employer within predetermined amounts set in retention limits (deductible).

No matter which method is used to finance the workers’ compensation risk, the employers and employees are subject to the same laws and rules of procedure.

Self-insurance is permitted in 48 states, American Samoa and the District of Columbia.  In each of these jurisdictions there are statutes enabling and rules governing the respective self-insured programs.

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• some employers may benefit by self-insurance?

Those who may benefit:

• Employers who are highly profitable and consistently have financial ratios equaling or exceeding their respective industry standards

• Employers of sufficient size to realize an economic benefit by self-insuring

• Employers who are willing to commit and direct their resources to maximize safety and loss control to the fullest extent possible

• Employers who have historically and consistently paid premiums which are disproportionately high compared to their losses

• Employers who consistently carry and experience modification credit

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• some employers should not consider self-insuring?

Who are they?

• Employers with insufficient assets to withstand a catastrophic loss
• Employers with present or potential solvency problems who may not be able to meet current or long-term financial obligations
• Employers who are unwilling or unable to commit and direct resources to maximize safety and loss control programs
• Employers having a history of workers’ compensation insurance debit modifications
• Employers who have had their workers’ compensation coverage canceled or denied

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