The most common reason for buying a ghost policy is to satisfy some requirement to provide a certificate of insurance to a general contractor or other company. Generally, a small contractor will win a bid to perform work, but will be required to provide proof of 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.
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.
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 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 required minimum owner wages are applied to a policy.
Here's a quick example: Let's say you're a small carpenter in GA using class code 5645 with a rate of 75.87 per hundred. The current minimum payroll for a sole-proprietor in Georgia is $47,000. The minimum for owners of a corporation or LLC is $46,800.
Policy Type |
Premium Amount |
Ghost Policy |
$1,500 - $1,800 |
Standard Policy ($47,000/$100) |
$35,659 + expense constant/fees |
(47,000/100 x 75.87 = $35,659) |
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How Much Will a Ghost Policy Cost?
There are a few private insurance companies that quote ghost policy insurance in select states. However, most ghost policy coverage is written through the state insurance fund.
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 you will actually have coverage in the event of an injury. 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 much more than a ghost policy.
Below is our 2016 Table indicating the cost and availability of ghost insurance by state:
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 |
Hew 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 |
Washington DC |
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 programs for self-employed workers compensation insurance.
How Do I Purchase a Ghost Policy?
Like any other workers compensation policy, a ghost policy is for a period of one year. Ghost insurance 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 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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