What is a Ghost Policy?

What is a Ghost Policy?
We often see new business come in where we did not offer workers’ compensation coverage due to it being a one-man shop. We now have a product through ABM to offer self-employed business owners workers’ comp coverage that will allow them to bid on work they many have previously avoided.

Did you know we have carriers that write ghost policies? A ghost policy is a minimum premium workers’ comp policy for a one-person business. The company owner is exempt from the policy, so it doesn’t 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 business owners provide a certificate of insurance (COI) without having to pay for a full workers’ compensation policy.

However, if you have employees or need workers’ comp coverage (not just a policy to meet a contract requirement), 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. There are a few specific circumstances where it might make sense. 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.

Typically, the following types of risks are not eligible to be written as a ghost policy:

• HVAC
• Plumbing
• Electricians
• Painters
• Flooring Installers

If you are a self-employed business owner interested in a ghost policy, have your broker reach out to ABM at info@abmbrokerage.com.