Workers Compensation

Ghost Policy

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What is Ghost Insurance?
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Workers Comp Ghost Policy Insurance

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

Workers Compensation Insurance Ghost Policy

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 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 hiring the subcontractor. Ghost policies are not available in all states.

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Why Would I Need a Ghost Policy? Workers Compensation Icon.

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)

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.

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. Fortunately, 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 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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Workers Compensation Experts Ghost Policy Risks

A lot of self-employed business owners buy ghost policy coverage each year. But if you hire employees or pay subcontractors during the policy period you may be subject to additional audit premium. If you are injured while acting as a subcontractor for another business that business may be liable for your claim and the cost of paying premium for any payments made to you.

For more information on ghost insurance, contact one of our Workers Compensation Specialists today at 888-611-7467. Or start your WC quote online.

National Agency Number: 8847381
National Producer Number: 5064979

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