What is a Ghost Policy?

We often see new bind order notices come in for accounts where we did not offer workers’ compensation coverage with a comment that says, “one-man shop”. We now have a product through ABM to offer these self-employed business owners workers’ comp coverage that will allow them to bid on work they may 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 your clients have employees or need workers’ comp coverage (not just a policy to meet a contract requirement), they’ll need a true workers’ compensation insurance policy — not a ghost policy. In fact, signing up for a ghost policy when they have employees could lead to serious legal and financial consequences for them and their 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 they don’t have any employees. A ghost policy will fulfill their requirements without having to buy a full policy.

Typically, the following risks are not eligible to be written as a Ghost Policy:

• HVAC
• Plumbing
• Electricians
• Painters
• Flooring Installers

If you are interested in ghost policies for your clients, contact us at info@abmbrokerage.com.

Tip of the Day: Through ABM we have carriers that writes new ventures nationally in all states (except for the four monopolistic states of WA, WY, ND, OH).