A workers comp ghost policy is one of the stranger products in commercial insurance: a workers’ compensation policy that, on day one, covers nobody. The owner is excluded, there are no employees, and the payroll on the policy is effectively zero. So why would anyone pay for it? Because general contractors and clients demand a certificate of workers’ comp insurance before letting you on the job, whether or not you have employees. Ghost policies exist to solve that paperwork problem for owner-only businesses. Used correctly they are legitimate; used carelessly they become an expensive audit surprise.
Why General Contractors Demand Workers’ Comp Certificates
When a GC hires a subcontractor without workers’ comp coverage, most states’ rules push that subcontractor’s injury exposure, and payroll, onto the GC’s own policy at audit. To avoid paying premium on your labor and absorbing your injuries, GCs require every sub to show a workers’ comp certificate, no exceptions, even for a one-person operation legally exempt from carrying coverage on itself. The certificate is what unlocks the contract, and that is the gap a ghost policy fills.
How a Ghost Policy Works
The policy is a real workers’ compensation policy issued with the owner formally excluded from coverage and no employee payroll reported. Premium is based on a state minimum, commonly in the range of $750 to $2,000 per year depending on the state and class, since the carrier must charge something to issue the policy and stand behind the certificate. If you hire no one all year, the audit confirms zero payroll and the minimum premium stands. The certificate it generates satisfies most GC requirements, which is its entire purpose.
What a Ghost Policy Does Not Do
It does not cover the owner’s own injuries, because the owner is excluded by design. If you fall from a ladder, your medical bills are yours, which makes personal health coverage and disability protection important companions. It also does not cover casual labor you pick up for a busy week, unless you report that payroll, at which point the policy converts in practice to a normal, premium-bearing one.
Where Ghost Policies Go Wrong
The predictable failure mode is hiring help and not telling anyone. Carriers audit workers’ comp policies annually, and they cross-reference tax filings, certificates you have issued, and job records. Unreported helpers discovered at audit generate back premium at full rates plus penalties, and an injured off-the-books helper is a genuine catastrophe: you could face the claim personally, plus regulatory consequences for being effectively uninsured for an employee. The second failure mode is jurisdictional: not every state permits ghost policies, and requirements vary, so what worked in one state may not be available in the next.
Ghost Policy vs. Full Workers’ Comp Policy
The decision is straightforward once framed honestly. If you are truly and durably solo, a ghost policy buys the certificate GCs demand at minimum cost. If you use helpers, day labor, or plan to hire this year, a standard policy with accurately estimated payroll is safer and often not dramatically more expensive at small payrolls. And if you want your own injuries covered, you can elect coverage for yourself under a standard policy instead of excluding yourself, an option worth pricing given how physically risky trade work is.
Nevada Considerations
Nevada requires workers’ compensation from the first employee, and its construction industry rules are strict about subcontractor coverage rolling up to hiring contractors. Sole proprietors without employees are generally exempt for themselves, which is precisely the population ghost policies serve. Contractors licensed with the Nevada State Contractors Board should also keep their industrial insurance status consistent with what they certified to the Board, since mismatches can create licensing trouble on top of insurance trouble.
Frequently Asked Questions About Ghost Policies
Is a ghost policy legal?
Yes, where offered. It is a legitimately issued minimum-premium workers’ comp policy with an owner exclusion, not a trick. The risk comes from using it while actually employing people.
Will every GC accept a ghost policy certificate?
Most do, since the certificate shows an active policy. Some sophisticated GCs ask whether owners are excluded, and a few require owners to carry coverage on themselves. Ask the GC before buying.
What does a ghost policy cost?
Typically a state minimum premium, often around $1,000 per year give or take, far less than a policy with real payroll but not free.
What happens if I hire someone mid-year?
Call your agent immediately and add the payroll. The policy converts to normal rating from that point, which is vastly cheaper than an audit discovery or an uncovered injury.
Talk to a Nevada Insurance Expert
Not sure whether a ghost policy or a full policy fits your situation? We will walk through it with you honestly. My Policy Plug is a Nevada independent insurance agency that shops multiple carriers to find the right coverage at the right price. Call us today at 702-444-2367 or visit mypolicyplug.com for a fast, free quote.
What Is Employment Practices Liability Insurance (EPLI) and Does Your Business Need It?Don’t forget to share this article
The next step is easy, call us at 702-444-2367, or click below to start your insurance quote
Related Articles
Employee lawsuits are one of the most common ways small businesses end up in court. Here is what EPLI covers, what it costs, and why small employers need it most.
4 min read/Driving to client sites, hauling supplies, making deliveries? Your personal auto policy may not cover it. Here is where the line falls and how to stay covered.
4.2 min read/Solar installation combines roofing risk with electrical work at height. Here is the insurance Nevada solar contractors need to bid, install, and sleep at night.
4.3 min read/
