Workers' Comp Ghost Policy

A ghost insurance policy helps self-employed business owners satisfy workers comp insurance coverage requirements.

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What is a Ghost Policy?

A ghost insurance policy is a workers' compensation policy where the owner is excluded from coverage and there are no additional employees working for the business. This type of policy is really not designed to provide actual workers' comp benefits unless the employer hires employees or becomes liable for an uninsured subcontractor. A ghost policy is typically purchased by a subcontractor to satisfy coverage requirements of a general contractor or other entity who has hired the subcontractor. Ghost policies may not be available in all states.

We've been helping small business owners find better deals on insurance coverage for over 15 years. Our experts understand the underwriting requirements from the insurance companies and we know how to negotiate the best rates. That's why we've developed target programs designed to help you get the best rates and most flexible payment options.

We partner with the best carriers writing workers' comp ghost policies.

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Why Would I Need a Ghost Policy?

The most common reason for buying a ghost policy is to satisfy the requirement to provide a certificate of insurance to a general contractor or other company your are working with. Often times, a small sub-contractor will win a bid to perform work, but they are required to provide proof of workers' comp coverage prior to starting the job. The whole concept of a ghost policy is to ensure a sub-contractor has some sort of coverage in place in case they hire employees, or another uninsured subcontractor, to assist with a job. It also allows them to exclude any payments made to sub-contractors from their own policy.

Ghost polices are strictly a form of self-employed workers' compensation insurance. There are a large number of small contractors and/or sub-contractors who do not have any employees and who do not want to pay higher premiums for coverage on themselves. A ghost policy is the cheapest way for self-employed business owners to get a workers' comp policy.

A word of caution on ghost insurance coverage! A ghost policy has limitations and risks. Owners' are excluded from coverage so no benefits will be paid under the policy if an excluded owner is injured. Health insurance is not intended to cover work-related injuries. Additionally, if your business does work for a customer they could be held liable for the cost of injuries if you hire employees, or other sub-contractors, and they are injured while working for your customer. In some states, contractors are required to carry workers' compensation on themselves even when they have no employees. Policies are also subject to an annual audit to determine if your business hired employees or used other uninsured sub-contractors.

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How Does a Ghost Policy Work?

The term ghost policy refers to the fact that the workers' comp policy basically provides no "real coverage". It is a minimum earned policy whereas the owner is excluded from coverage on the Acord 130 Form, or state exclusion form and there are no active or anticipated employees for the policy period.

A minimum earned policy is a policy that includes the standard state expense constant and the insurance companies minimum required premium for a policy. This type of policy is usually significantly cheaper than a policy where the state requires that minimum owner wages are applied to a policy. A ghost policy is also known as a minimum premium policy.

Here's a quick example: Let's say you're a small carpenter in GA using class code 5645 with a rate of 25.00 per hundred. The current minimum payroll for a sole-proprietor in Georgia is $54,200,000. The minimum for owners of a corporation or LLC is $54,600.

Policy Type	Premium Amount
Ghost Policy	$1,500 - $1,800
Standard Policy ($54,200/$100) (54,200,000/100 x 25.00 = $13,550)	$13,550 + expense constant/fees

Workers' Comp Class Codes

Employees are grouped into classification codes based on their job duties and work functions. The National Council on Compensation Insurance (NCCI) currently utilizes nearly 800 class codes to help insurance companies and agents categorize employees for rating purposes. Insurance companies set a base manual rate for each class code in order to begin pricing a policy.

Properly classifying workers is an important part of the quote process. Mis-classified employees can cost small businesses thousands of dollars. They could end up paying too much for coverage or owing more money after an annual audit.

Workers' Comp Insurance for Self-Employed

How Much is Workers' Comp Insurance for Self-Employed?

There are several private insurance companies that quote ghost policy insurance in select states. However, most ghost policy coverage is written through the state insurance fund. Premium financing may be available.

In some instances, self-employed business owners may be better off including themselves for coverage instead of purchasing a ghost policy. One primary reason is that they will actually have coverage in the event of an injury. Workers' comp pays for medical expenses and replaces a portion of missing wages when a covered person is unable to work. Additionally, there are more insurance company options available and you could qualify for a better payment plan. Finally, depending on your class code and workers' compensation rates, the overall cost of coverage might not be too much more than a ghost policy.

State	Cost and Availability
Alabama	$1500 - $1800; Annual pay
Alaska	$800 - $1100; Annual pay
Arizona	$1000 - $1300; Annual pay
Arkansas	$1100 - $1400; Annual pay
California	Ghost policy not available
Colorado	Ghost policy not available
Connecticut	Owner exclusion process too difficult
Delaware	Ghost policy not available; Contact DCRB at 302.654.1435
Florida	Must purchase via JUA; Call 941.378.7400
Georgia	$1500 - $1800; Annual pay
Hawaii	Ghost policy not available; Contact HEMIC at 888.292.3642
Idaho	Ghost policy not available
Illinois	$1000 - $1300; 50% down available
Indiana	$1250 - $1550; Annual pay
Iowa	$700 - $1000; Annual pay
Kansas	$1000 - $1300; 50% down
Kentucky	Ghost policy not available
Louisiana	Ghost policy not available; Contact LWCC at 225.924.7788
Maine	Ghost policy not available; Contact MEMIC at 800.660.1306
Maryland	Ghost policy not available
Massachusetts	Ghost policy not available; Contact WCRIB at 617.439.9030
Michigan	Ghost policy not available
Minnesota	Ghost policy not available
Mississippi	$1500 - $1800; Annual pay
Missouri	$1060 - $1400; Annual pay
Montana	Contact Montana State Fund at 800.332.6102 for Ghost Policy
Nebraska	$1000 - $1300; Annual pay
Nevada	$1000 - $1300; 50% down available
New Hampshire	$1000 - $1300; 50% down available
New Jersey	Ghost policy not available
New Mexico	$825 - $1200; Annual pay
New York	Ghost policy not available; Contact NYSIF at 518.437.6400
North Carolina	Ghost policy not available; Contact NCRB at 919.582.1056
North Dakota	Monopolistic state; Contact Workforce Safety at 800.777.5033
Ohio	Monopolistic state; Contact BWC at 800.644.6292
Oklahoma	Ghost policy not available; Contact CompSource at 800.347.3863
Oregon	Ghost policy not available; Contact SWIF at 570.963.4635
Pennsylvania	Ghost policy not available
Rhode Island	Ghost policy not available
South Carolina	$1250 - $1550; Annual pay
South Dakota	$1500 - $1800; Annual pay
Tennessee	Ghost policy not available; Contact TWCIP at 800.471.6767
Texas	Ghost policy not available
Utah	Ghost policy not available
Vermont	$1000 - $1300; 50% down available
Virginia	$1125 - $1450; 50% down available
Washington	Monopolistic state; Contact Labor & Industries at 360.902.5800
District of Columbia	Owners can not be excluded
West Virginia`	$1285 - $1600; Annual pay
Wisconsin	Ghost policy not available; Contact WCRB at 262.796.4540
Wyoming	Monopolistic state; Contact Workers' Safety at 307.777.7441

* If you are located in a state where ghost polices are not available contact one of our specialist to see if your business qualifies for one of our standard workers' compensation insurance for self-employed programs.

How Do I Get a Ghost Policy?

Like any other workers' compensation policy, a ghost policy is for a period of one year. Ghost insurance coverage should only be purchased by self-employed business owners with the following characteristics: (a) no employees or plans to hire during policy period, (b) no payments to uninsured subcontractors, and (c) no payroll of any kind aside from the excluded owner(s). Ghost policies are subject to audit and if any additional exposure is determined the policyholder will be on the hook for additional premium, or audit balance.

Contact one of our Workers' Compensation Specialists today at 888.611.7467 to learn more about our ghost policy programs and other insurance products and services.

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Benefits of a Ghost Policy

There are several benefits to buying a ghost workers comp policy. Self-employed business who purchase ghost polices might save a fair amount of money over a standard work comp policy.

A ghost policy satisfies most contract requirement for various contractors and allows an insurance agency to issue certificates of insurance on behalf of the insured. The second benefit is that the policyholder should have automatic coverage under the policy for any employees or uninsured subcontractors hired during the policy period.

It is important for small business owners to understand that any additional employee wages or payments to uninsured subcontractors will likely result in additional premium due after a workers compensation audit is performed. Policyholders should contact their agent or insurance company to endorse their policy in the event an employee is hired during the policy period.

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Best Small Business Insurance

A lot of business owners are overpaying for insurance coverage because their agent does not have access to the lowest cost insurance companies. Other business owners are using installment plans based on estimated payroll that doesn't adjust as payroll fluctuates. We help owner-only businesses find the best insurance rates for each unique state and type of business. Our Pay As You Go plans will improve business cash flow and protect businesses from large audit bills. We work with all types of business owners. We've been writing small business insurance since 2005.

Program Features
No Minimum Premium Requirements
Pay As You Go Work Comp - $0 Deposit
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Commercial Package Insurance Options

Cheap Business Insurance

The cost of business insurance has been increasing for small business owners. General liability and workers' comp insurance have been the major cause of the increase in the cost of coverage. We've partnered with our insurance companies to provide more affordable commercial insurance solutions. Ask about our commercial package insurance options:

Workers' Comp Insurance for Self-Employed

General Liability Insurance

Commercial Auto

Inland Marine Coverage

Umbrella Liability and more

Not all lines of insurance coverage or all class codes will be available in all states. Contact one of our workers' comp Specialists for program details on general liability and workers' compensation insurance.

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How Much is Small Business Insurance?

The average cost of insurance for a small business with no employees will depend on the type of business. On average, most contractors pay about $1,100 for a workers' comp policy. The cost of general liability insurance averages around $500.00 per year. Business owners such as salons or offices may pay less for coverage because there is less risk of a claim, while some business professionals who give advice or provide more technical services may pay a few thousand dollars for coverage.

Workers' Comp Costs

Work Comp costs are based on payroll (rates per $100)
The state and EMR Rating will affect the premium
Class codes help determine rates
Premium discounts and policy credits may apply

General Liability Costs

GL rates are based on sales or payroll depending on the business (rated per $1000)
Gross revenue does affect pricing
The business operations matters to underwriters
Prior clams and years in business affect pricing
SIC codes vary by industry

Are Businesses Required to Have Insurance?

Do I need to get workers compensation insurance?

Workers' compensation insurance is required in all states except Texas. Most states require business owners to buy coverage as soon as they hire their first employee. A few states require coverage between 3-5 employees. Special state laws apply to contractors who may beed to purchase work comp even when they have no employees. Requirements may vary for sole-proprietors, partnerships. LLC's, and corporations.

Do I need general liability insurance?

General liability insurance is not required by law in any state. GL is almost always purchased by business owners because a contract requires coverage or because their customers require it. Small businesses that perform sub-contract work for larger companies are typically required to provide proof of general liability and workers' comp on a certificate of insurance.

If you own a small business it's a good policy to buy both coverages in order to protect your business and personal assets. Inland marine (tools and equipment), property and commercial auto are not required by law, but business owners run the risk of baring the cost of replacement and liability for any related claims or losses.

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Business details, locations, FEIN or SSN
Estimated annual payroll and job duties- class codes
Claims info or loss history- if applicable

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Self-Employed Workers' Comp

Workers' compensation coverage plays an important role in the relationship between employers and employees. Employers who fail to purchase a policy run the risk of assuming all liability for workers' comp benefits including medical expenses and lost wages. Many states also impose severe penalties and fines for employers who fail to buy coverage when legally required.

Contact a Specialist today at 888-611-7467 to get a ghost policy or find out if you're required to have coverage in your state. Or start a quote online today.

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Visit NCCI for more resources and information about workers' compensation class codes. Visit United States Department of Labor for more information about government agencies managing workers compensation insurance rates.

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