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Colorado business insurance: requirements and costs

Colorado requires workers' comp from the first employee, including part-time staff and family members.⁠1 The Division of Insurance approved a 6.9% average cut in NCCI loss costs for 2026, the twelfth straight annual decrease, and NCCI has proposed a further 3.9% cut for January 1, 2027.⁠4⁠5⁠6 Pinnacol Assurance must cover any Colorado employer, while more than 500 licensed insurers also write the line.⁠2

Checked against 13 sources Last reviewed How we check figures

Colorado at a glance

Workers’ comp required1+ employees, including part-time and family members
Where employers buy itPrivate insurers and a competitive state fund (Pinnacol Assurance)
Rates set byNational Council on Compensation Insurance
Employer comp cost, 2023$0.64 per $100 of covered wages (US $0.98)
Comp rate index, 2024$1.05, ranked 28 of 51 (1 = most expensive)
Employer health premium, 2025$8,816 single, $25,055 family (average total premium)
Auto liability minimum25/50/15
Payroll insurance programsColorado Family and Medical Leave Insurance (FAMLI)

Colorado has no monopolistic fund and no mandatory rate: NCCI files advisory loss costs, the Commissioner of Insurance approves them after a public hearing and an independent actuarial review, and every insurer adds its own expenses to that base to get the rate it charges.⁠4⁠5 The state-created Pinnacol Assurance competes with private carriers but is required to offer coverage to any Colorado employer.⁠2 Employers may also self-insure with a permit from the Division of Workers' Compensation.⁠2 The approved decreases reach back years. The Division reports a 56.8% cumulative fall in average loss costs since 2015.⁠4 The latest approval, for January 1, 2026, was -6.9% on average. By industry group it ranged from -8.2% for contracting to -6.1% for manufacturing, and NCCI's filing capped each class at 15 points either side of its group's change.⁠5 The Commissioner's order cites falling lost-time claim frequency and falling average cost per claim as the driver. It also notes that NCCI's Colorado data include Pinnacol's higher loss experience without adjustment.⁠5 NCCI's proposal for 2027 is -3.9%, with a 5.1% decrease from experience and development partly offset by trend (+1.0%) and other changes (+0.4%). The Division's actuary, Davies, reported no actuarial objection to the proposed -3.9%; we did not confirm whether an order has been issued.⁠6

The official cost data show the same direction. NASI estimates Colorado employers spent $0.64 per $100 of covered wages on workers' comp in 2023, down from $0.86 in 2019. By our calculation that is a 26% fall, against 16% for the national figure, which went from $1.17 to $0.98.⁠11 Oregon's study of manual rates in effect January 1, 2024 puts Colorado 28th of 51 jurisdictions at an index of $1.05 per $100 of payroll, 96% of the $1.09 median (Georgia). That is close to New Mexico ($1.05) and well under Wyoming ($1.41, 8th) and Oklahoma ($1.33, 15th).⁠12 The gap between the two measures is a reminder that the NASI figure reflects actual premiums and each state's industry mix, while the Oregon index prices the same 50 classes everywhere. For health benefits, AHRQ's 2025 survey found 31.6% of Colorado private-sector establishments in firms with fewer than 50 employees offered coverage, against 32.1% nationally. Where they did, the average single premium was $8,039, about 11% below the $9,034 small-firm national average by our calculation, with the employee paying an average of $1,295 against $1,924.⁠13

Two Colorado rules matter beyond the premium itself. First, construction: if you hire contractors for construction work you must either provide them with workers' comp (and may charge them their share of the premium) or collect proof that each business you contract with directly carries a policy or has filed a rejection of coverage, and the Division can fine you if they do not.⁠2 Since May 29, 2026, under Senate Bill 26-093, an applicant for a building or construction permit on a project over $1 million must file a declaration with the local permitting agency, before work starts, that all workers under the permit are covered.⁠1 Second, FAMLI: Colorado's paid family and medical leave premium is split between employer and employee for larger employers, and an approved private plan can replace it.⁠8⁠9 Neither rule changes the manual rate, but both change what you need to hold or collect before you can bid, pull a permit or run payroll.

For budgeting, start from the Colorado rule that your own rate is the insurer's expense load added to the approved loss cost, then adjusted by your experience modification. The 6.9% cut was an average over classes and does not describe your policy.⁠4 Going without coverage is costly. The Division can fine an uninsured employer up to $500 a day and shut the business down; at the maximum, 30 days uninsured would be $15,000, by our calculation, before any injury claim.⁠3

Workers’ compensation in Colorado

Every Colorado employer with one or more employees must carry workers' comp, whether the workers are full-time, part-time or family members, and anyone paid for work is presumed to be an employee.⁠1

Who is exempt

  • Corporate officers and LLC members who own at least 10% and hold an officer position (or are an LLC member) may reject coverage by filing a form
  • Construction sole proprietors and partnerships must either insure themselves or file a rejection of coverage
  • Domestic workers (including nannies and au pairs) working under 40 hours and under five days a week
  • Real estate brokers and agents working solely on commission
  • Certain motor carrier lease drivers
  • Casual farm and ranch labor or casual maintenance paid no more than $2,000 a year
  • Ski volunteers

Buying coverage and who sets the rates

Buy from any of the more than 500 licensed insurers, including Pinnacol Assurance, the state-created carrier that must cover any Colorado employer, or qualify to self-insure. You cannot deduct any part of the premium from employee wages.⁠2

Latest rate decision (1 Jan 2026): Commissioner approved NCCI's average voluntary-market loss cost change of -6.9% for January 1, 2026 (contracting -8.2%, manufacturing -6.1%). The 12th straight annual decrease; NCCI's proposal for January 1, 2027 is -3.9% (Davies review: no actuarial objection; the Division's filings page listed no order for 2027 on Oct. 13, 2026). Official notice.

Employers that qualify may self-insure under a permit from the Division of Workers' Compensation.⁠2

Penalties for going without

Up to $500 for each day uninsured, and the business may be shut down. If a worker is hurt while you are uninsured you pay the claim plus an additional penalty totaling 25% of the worker's benefits.⁠3

What Colorado employers pay

Employer workers’ compensation costs per $100 of covered wages, 2019–2023
YearColoradoUnited States
2019$0.86$1.17
2020$0.76$1.08
2021$0.71$1.01
2022$0.66$1.00
2023$0.64$0.98

Employer cost per $100 of covered wages: premiums paid by insured employers plus benefits and administrative costs of self-insured employers, divided by the wages of workers covered by workers’ compensation. The United States figure is NASI’s national total, which includes federal programs. Source: National Academy of Social Insurance (NASI), published 11 Aug 2026.

Oregon’s biennial comparison of workers’ comp rates puts Colorado’s index for rates in effect on 1 January 2024 at $1.05 per $100 of payroll, 4% below the national median of $1.09 (rank 28 of 51, where 1 is the most expensive). The index prices the same 50 risk classes, weighted by Oregon payroll, in every state, so it compares rate levels rather than what employers actually pay. Compare every state.

Disability and paid leave insurance

Colorado runs a payroll-funded program that employers must register for, fund or insure on top of workers’ compensation.

Colorado disability and paid leave programs, 2026
Program2026 contributionEmployer’s part
Colorado Family and Medical Leave Insurance (FAMLI)0.88% of wages in 2026 for employers with 10+ employees; 0.44% for 9 or fewer.⁠8With 10 or more employees (counted over 20+ workweeks in the prior year) you remit the full 0.88%, and may deduct up to 0.44% from employee wages; with nine or fewer, the 0.44% employee share is what is remitted.⁠8⁠9 An approved private plan can replace FAMLI.⁠9

Premiums are calculated on gross wages.

Employer health insurance in Colorado

Average annual premium per enrolled employee at private-sector employers, 2025
MeasureColoradoFirms under 50United States
Single coverage, total premium$8,816$8,039$9,025
Family coverage, total premium$25,055$21,275$26,281
Employee share, single$1,618–$1,817
Employers offering coverage48.3%31.6%49.2%

Average total annual premium per enrolled employee at private-sector establishments that offer health insurance; the offer rate is the share of establishments offering coverage. Small firms have fewer than 50 employees. Source: Agency for Healthcare Research and Quality (AHRQ), Center for Financing, Access and Cost Trends, 2025 survey year. All states.

Commercial auto in Colorado

Every vehicle registered in Colorado, including business vehicles, must carry at least 25/50/15 in liability limits (bodily injury per person / per accident / property damage, in thousands of dollars). Official source.

Division of Insurance minimum of $25,000 per person and $50,000 per accident for bodily injury and $15,000 for property damage. Uninsured/underinsured motorist coverage is included unless rejected in writing.⁠10

Trucks and buses used in interstate commerce must also meet federal minimums of $750,000 to $5 million: see commercial auto minimums and what commercial auto costs.

Other Colorado rules that affect insurance costs

Hiring construction subcontractors

Construction businesses must carry a policy for their employees. If you use contractors you must either provide them with coverage (charging their share of the premium) or get proof from each business you contract with directly of insurance or of a filed rejection of coverage; failing that you may be fined.⁠2

Permits over $1 million (SB 26-093)

From May 29, 2026, anyone applying for a building or construction permit on a project costing over $1 million must file with the local permitting agency, before work begins, a declaration that all workers under the permit have valid comp coverage for the permit's duration. The Division offers a Declaration of Compliance form.⁠1

Colorado compared with its neighbors

Workers’ comp and health insurance costs, Colorado and neighboring states
Colorado$0.64$1.05$8,816
Wyoming$1.57$1.41$8,997
Nebraska$0.89$1.12$8,907
Kansas$0.84$0.91$8,657
Oklahoma$0.91$1.33$8,124
New Mexico$0.98$1.05$9,447
Arizona$0.62$0.70$7,734
Utah$0.58$0.63$8,448

Sources

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National figures: NASI (employer comp costs), Oregon DCBS (rate index), AHRQ MEPS-IC (health premiums).

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Other states

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