A ghost policy is a minimum premium workers’ comp policy for a one-person business. However, the company owner is exempt from the policy, so it doesn’t actually cover anyone. You can expect an annual premium between $1,000 and $2,000.
A workers’ compensation ghost policy can help self-employed business owners land clients and comply with state laws. Here’s everything you need to know about getting a ghost policy for workers’ comp.
What is a ghost policy for workers’ compensation, and why is it important?
A ghost policy is a minimum premium workers’ comp policy for a one-person business. However, the company owner is exempt from the policy, so it doesn’t actually cover anyone.
As many individual contractors and solo business owners are normally exempt from workers’ comp requirements, this type of policy is designed to help these types of business owners provide a certificate of insurance (COI) without having to pay for a full workers’ compensation policy.
Who may need a ghost policy for workers’ comp?
A ghost policy is ideal for self-employed business owners with no employees who need to show proof of workers’ compensation insurance to either win a new contract or to satisfy a state’s workers’ comp requirement.
If you have employees or need workers’ comp coverage (not just a policy to meet a contract requirement), however, you’ll need a true workers’ compensation insurance policy — not a ghost policy. In fact, signing up for a ghost policy when you have employees could lead to serious legal and financial consequences for you and your company.
Not every solo business owner will need a ghost policy. Here are a few specific circumstances where it might make sense.
You own a single-person business in a state that requires proof of workers’ comp
Some states require every business to carry workers’ compensation insurance — even if you don’t have any employees. A ghost policy will fulfill your requirements without having to buy a full policy.
You need proof of insurance for a contract
You may run into a potential client who will only hire your company if you can show proof of workers’ comp insurance. If you already have general liability insurance and no one else working for you, you may not want to invest in a full workers’ compensation policy.
In this case, a ghost policy can help you win the contract.
SOURCE: Workers’ Comp Ghost Policy | Insureon
