What is a workers' comp ghost policy, and is it enough?
A ghost policy is a minimum-premium workers' comp policy for a business with no employees, with the owner excluded. Is it enough? Yes for the certificate, no for protection. It gives a general contractor the proof of coverage its own audit asks for. It pays nothing if you are hurt, and anyone you hire during the term is covered and billed at audit.
Updated . Written by Andre Beukers, principal at Redoubt, a commercial insurance agency in Salt Lake City, not a government office.
What does a ghost policy cover, and does it cover me if I get hurt?
It covers anyone you hire during the term. It does not cover you: the policy works by leaving you off it. In Utah, a sole proprietor or partner is covered only if the business elects in and tells the carrier in writing, except that an owner who personally drives for a motor carrier with at least one other employee is an employee by statute (Utah Code 34A-2-104(3)(b)). In Florida, a construction officer who files an exemption "may not recover benefits or compensation" (Florida Statutes 440.05).
Covering your own injuries takes a full policy with you elected in, priced on an owner payroll figure set by state rules.
Why does my general contractor want a ghost policy?
Because your pay can land on its bill. Under the standard NCCI policy form, WC 00 00 00 C, when a GC has no payroll records for a sub, "the contract price for their services and materials may be used as the premium basis." That clause drops away once the GC shows you "lawfully secured" your own workers' comp.
Utah treats a sub and the sub's workers as the hiring contractor's employees unless the contractor "obtains and relies on" proof of the sub's coverage or a Utah coverage waiver (Utah Code 34A-2-103(7)). Florida requires a contractor to collect a subcontractor's proof of insurance or exemption certificate (Florida Statutes 440.10).
How much does a ghost policy cost?
The carrier's minimum premium. It varies by carrier, state, and class code, so only a quote gives the number. NCCI's Basic Manual (Rule 3-A-15) defines it as "the lowest policy premium that is required in order to provide insurance under the standard policy." Each carrier files its own, it is printed on the policy's Information Page, and an experience mod does not change it.
- Ask for the minimum premium in dollars and the class code behind it
- Ask about any expense constant, fees, or state surcharges
What happens if I hire someone while I have a ghost policy?
They are covered, and you pay for them. A ghost policy estimates zero payroll, but the final premium is set "by using the actual, not the estimated, premium basis," and the carrier may audit up to three years after the term ends (WC 00 00 00 C, Part Five).
Tell the carrier when you hire, so the bill does not all land at audit.
Is a ghost policy legal?
Where a carrier writes one, yes: it is an ordinary workers' comp policy with no payroll to report yet. Availability depends on the state and carrier, and private policies are not sold in the four state-fund-only states (North Dakota, Ohio, Washington, Wyoming).
Can I use a workers' comp exemption instead of a ghost policy?
In some states, depending on how the business is organized and what the contract accepts.
- Utah: a Labor Commission coverage waiver for owners with no employees, $50, one year. Utah Code 34A-2-103(7) lets a hiring contractor rely on it.
- Florida: a construction officer's certificate of election to be exempt, $50, two years (440.05), given to the contractor (440.10).
- New York: the CE-200 exemption is for government permits and contracts and "may not be used" to prove exemption to another business or its carrier.
- Elsewhere: check the state agency, then ask the GC in writing which document it accepts.
Ghost policy vs full workers' comp policy
Both use the same standard policy form (NCCI's WC 00 00 00 C in states that use it). They differ in who is on it and what payroll it carries.
| Ghost policy | Full policy | |
|---|---|---|
| Who is covered | No one today. Anyone hired during the term. | Every employee, plus any owner or officer who elects in. |
| Premium | The carrier's minimum premium for your class code. | Rate per $100 of actual payroll, adjusted by any experience mod, never below the minimum. |
| Certificate for a GC | Yes. | Yes. |
| If the owner is hurt | Nothing paid to an excluded owner. | Benefits paid if the owner elected in. |
| Audit | Still audited. New hires and uninsured subs are billed. | Estimated payroll trued up to actual. |
| Fits when | An owner-only business needs proof of coverage for a job. | The business has employees, or the owner wants to be covered. |
Whether a carrier writes an owner-only policy for your class code is its underwriting decision.
Where these answers come from
Statutes, state agencies, and rating bureaus. Requirements depend on the business, the worker setup, and the current instructions of the state agency, so check the source for your state before acting.
The next question
Workers’ comp requirements in every state
Each state page gives the employee threshold, the owner and officer exemptions, the penalty for going without, the rating bureau, the market, the enforcing agency, and the exemption filing, each with its statute or agency source.
- Alabama
- Alaska
- Arizona
- Arkansas
- California
- Colorado
- Connecticut
- Delaware
- District of Columbia
- Florida
- Georgia
- Hawaii
- Idaho
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maine
- Maryland
- Massachusetts
- Michigan
- Minnesota
- Mississippi
- Missouri
- Montana
- Nebraska
- Nevada
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- Rhode Island
- South Carolina
- South Dakota
- Tennessee
- Texas
- Utah
- Vermont
- Virginia
- Washington
- West Virginia
- Wisconsin
- Wyoming
Ghost policy FAQ
Does a ghost policy cover my 1099 helpers?+
The carrier may owe benefits, and it will bill for them. Pay to a helper with no workers' comp of their own can be counted as premium at audit, so get a certificate from anyone you pay for labor.
Can I cancel a ghost policy early?+
Yes, but it can save little. On cancelation the policy form applies a short-rate table, and the final premium "will not be less than the minimum premium" (WC 00 00 00 C, Part Five E).
Is a Utah waiver the same as a ghost policy?+
No. It is a $50 Labor Commission document, not insurance, good for one year. A hiring contractor can rely on it (Utah Code 34A-2-103(7)); ask whether the contract also wants a certificate of insurance.
Need a certificate for a job?
Tell us your trade, your state, and what the general contractor asked for. We will tell you whether a state waiver or a minimum-premium policy fits, and the minimum premium before you buy.
This is general insurance information, not legal advice or a coverage determination. Statutes, agency instructions, policy forms, and the facts of the business control.