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A Quick Guide to Workers’ Compensation (and What Is and Isn’t Covered)

Posted by: Karen Booher on March 4th, 2024

Many employers don’t know the ins and outs of workers’ compensation. What’s covered? What’s not covered? The following information, provided by Pinnacol Assurance, helps explain some of the basics.

What is Workers’ Compensation?

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.

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 some exceptions, including but not limited to:

What Does Workers’ Compensation Cover?

There are 2 different types of coverage: Part A (state-mandated) and Part B (employer’s liability coverage)

Part A

Part A 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 fault.

Part B

Premiums are based on your company’s payroll and the types of duties employees perform. Part B covers:

The type of injury determines how much an injured party is paid. The most common injury types and limits are bodily injury by:

Unlike Part A, Part B covers you in certain circumstances against liability to third parties who sustain damages as a result of an employee’s injury that is caused by your negligence.

What Isn’t Covered by Workers’ Comp Insurance?

Not everything is covered by WC insurance. Some items not covered include:

Injuries are covered, but may result in reduced compensation, when:

Other Things to Know About Workers’ Comp

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 the 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:

This article should not be considered legal advice. Questions about workers’ compensation insurance? Contact www.pinnacol.com or another workers’ compensation insurance provider.


Pinnacol Assurance newsletter, “What’s covered by workers’ comp (and what isn’t)”, February 2024.

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