Why do contractors demand it if I have no employees?

Because of how their own audit works. If you cannot produce a certificate, the auditor can treat what they paid you as payroll and charge the general contractor comp premium on it — so an uninsured subcontractor costs the contractor money directly. It is not scepticism about your business; it is that your certificate is what keeps you off their payroll figure. That is also why they want it renewed annually rather than once.

Am I covered if I get hurt?

Generally not, and this is the part worth being clear-eyed about. A ghost policy exists because the owner is excluded, so an owner injured at work has no comp claim — and many health plans exclude injuries arising out of employment, on the assumption comp covers them. If you want cover for yourself, elect INTO the policy rather than buying a ghost, and price it both ways. On a lower-hazard class the difference is often smaller than people expect.

What happens if I hire someone?

The policy stops being a ghost policy and needs to reflect real payroll. Tell your insurer when you take on anyone — including casual help, a day-rate laborer or a family member — because at audit the payroll will be found and the premium charged retrospectively, sometimes with a penalty. Businesses that hire a first employee mid-term and say nothing until audit get the largest bills.

What is a workers comp ghost policy, and do I need one?

It is a workers compensation policy for a business with no employees to cover — typically a sole proprietor or single-member LLC who has excluded themselves. It produces almost no coverage and one very useful thing: a certificate of insurance. General contractors and clients routinely require evidence of workers comp before letting you on site, and a ghost policy satisfies that requirement at minimum premium. It is bought for the paperwork, and that is a legitimate reason.

Call/Text(626) 344-2158

/ Start here

Tell us the situation.

A licensed human replies the same business day — not an auto-responder, and not five producers calling at once. We shop it across our carriers and tell you if the policy you already have is the right one.

We use this to quote and service your insurance, and we do not sell it or pass it to lead networks. Privacy policy.

The detail

Where a subcontractor cannot produce evidence of workers compensation, a hiring contractor’s premium audit can add payments made to that subcontractor to the contractor’s own payroll — which is why certificates are demanded even from owner-only businesses.
National Council on Compensation Insurance

What this means for you

Understand what you are buying: a certificate, not protection. If you are injured, an excluded owner on a ghost policy is not covered.
Check your health plan. Many exclude work-related injury, so an excluded owner can fall between two policies with nothing responding.
It stops being a ghost policy the moment you hire anyone — including a day-rate helper. Tell your insurer before the first payroll, not at audit.
It is usually cheaper than losing the work. Contractors who cannot produce a certificate get removed from bid lists, and the minimum premium is small against that.

Go deeper on any of these

Need this handled?

We do the filings, and we place the accounts other brokers decline — lapsed authority, claims history, new ventures. Tell us the situation and a licensed human replies the same business day.