Workers' Comp Ghost Policy: What It Is and When You Need One
No employees, but a general contractor won't let you on the job without proof of workers' comp? A ghost policy is the low-cost answer — as long as you understand its very real limits.
In one line: A ghost policy is a minimum-premium workers' comp policy for a business with no employees — it exists to produce a certificate of insurance so you can win work, not to protect you, your (nonexistent) staff, or your subcontractors.
In this guide:
1. What is a workers' comp ghost policy?
A ghost policy is a workers' compensation policy for a business with no employees — usually a sole proprietor or single-member LLC who excludes themselves from coverage. Because there's essentially no payroll to rate, the carrier issues it at its minimum premium.
The "ghost" refers to that near-zero payroll: it's a real, active policy, but it exists mainly to generate a certificate of insurance (COI) rather than to pay benefits to anyone. It's most common in states that use NCCI; the exact mechanics differ in states that run their own rating bureau, such as California's WCIRB.
2. Why would you need one?
The trigger is almost always someone requiring proof of coverage. General contractors, property managers, staffing firms, and larger clients frequently won't let a subcontractor or vendor onto a job — or won't release payment — without a workers' comp certificate, even if you're a one-person operation.
Rather than walk away from the work, a solo operator buys a ghost policy to produce that certificate at the lowest possible cost. In practice it's as much a business-development tool as an insurance product — it's how you become eligible to bid the job.
There's a reason the general contractor insists on it, too: if a sub has no coverage, the sub's pay can roll onto the GC's policy at their audit and inflate their premium and experience modification rate. Your certificate protects both sides.
3. What a ghost policy does not cover
This is the part that surprises people, and it's the reason a ghost policy is the right answer far less often than solo operators assume. A ghost policy:
- ✕ Does not cover the owner. You're excluded — if you're hurt on the job, it pays you nothing: no medical, no lost wages. To cover yourself, you elect to be included, which turns it into a standard policy with a payroll basis and a higher premium.
- ✕ Does not cover employees. You have none — the moment you hire anyone, even part-time, you need a real policy.
- ✕ Does not cover subcontractors. Uninsured subs you pay get treated as your employees at audit (more on that below).
In short: a ghost policy satisfies a contract requirement. It is not protection for you.
4. How much does a ghost policy cost?
Because there's little or no payroll to rate, a ghost policy is priced at the carrier's minimum premium — commonly around $800 to $1,500 per year, depending on your state, class code, and carrier. Higher-risk trades and states run higher.
It's usually the cheapest workers' comp you can buy, which is exactly why it's popular with solo contractors who simply need the certificate. For how premiums are built more generally, see how much workers' comp costs.
5. Ghost policy vs. a full policy — which do you need?
Ghost policy
- · Zero employees, owner excluded
- · Minimum premium (~$800–$1,500)
- · Produces a certificate of insurance
- · Pays no one a claim
Right when: you're a true solo operator and a GC or client requires proof of coverage.
Full policy
- · One or more employees, or owner included
- · Premium based on actual payroll
- · Actually pays medical & wage claims
- · Covers your team on the job
Right when: you hire anyone, use uninsured subs, or want protection for yourself.
6. The audit trap: subcontractors
Even a ghost policy gets audited at the end of the term. If the auditor finds you paid subcontractors or helpers who couldn't produce their own workers' comp certificates, those payments are treated as payroll — and you're billed premium on them, often at the sub's high-risk rate. That's how a cheap ghost policy quietly turns into a four- or five-figure bill.
The rule of thumb: if you ever pay a helper or sub, collect their certificate of insurance first — or plan to pay premium on them. Our audit survival guide covers exactly what to keep on file.
7. How to get one
- · Confirm you truly have no employees — and won't hire during the policy term.
- · Decide whether you need to be included. Most ghost policies exclude the owner, but some states require certain owners to be covered — check before you assume you can opt out.
- · Get quotes. Even a minimum-premium policy varies by carrier and state; an agency can place it quickly and get you the lowest option.
- · Send your certificate to whoever is requiring it, and keep it handy for future jobs.
- · Reassess the moment you hire or take on a sub — that's your cue to move to a full policy. Not sure whether you're required to carry coverage at all? See requirements by state.
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8. Frequently asked questions
What is a ghost policy in workers’ comp?
A ghost policy is a workers’ compensation policy for a business with no employees — usually a sole proprietor or single-member LLC who excludes themselves from coverage. Because there is essentially no payroll to rate, it is issued at the carrier’s minimum premium. It is a real, active policy, but it exists mainly to produce a certificate of insurance rather than to pay benefits to anyone.
Does a workers’ comp ghost policy cover the owner?
No. On a ghost policy the owner is excluded, so if you are injured on the job it pays you nothing — no medical bills and no lost wages. If you want coverage for yourself, you elect to be included, which turns it into a standard policy with a payroll basis and a higher premium.
How much does a ghost policy cost?
Because there is little or no payroll, a ghost policy is priced at the carrier’s minimum premium — commonly around $800 to $1,500 per year depending on your state, class code, and carrier. Higher-risk class codes and states push it higher. It is usually the cheapest workers’ comp you can buy.
Do I need a ghost policy if I have no employees?
Only if you need to prove coverage. Most states do not force a true solo operator with no employees to carry workers’ comp, but general contractors, property managers, staffing firms, and clients often will not let you on the job — or cut you a check — without a certificate of insurance. A ghost policy is how solo operators produce that certificate at the lowest cost.
Can I hire subcontractors on a ghost policy?
Not safely. Any subcontractor who cannot show their own workers’ comp certificate is treated as your employee at the annual audit, and you are billed premium on what you paid them. Collect a certificate of insurance from every sub, or move to a full policy — otherwise a cheap ghost policy can turn into a real bill.
Is a ghost policy real insurance?
Yes. It is a genuine, active workers’ compensation policy issued at minimum premium — “ghost” just refers to the near-zero payroll. It produces a valid certificate of insurance that satisfies most contract and general-contractor requirements.
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