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 Green Tree Risk Partners to offer self-employed business owners workers’ comp coverage that will allow them to bid on work they many have previously avoided, due to the GC or project owner requiring that all sub-contractors carry work comp insurance.
These policies are often referred to as “Owners/ Ghost Policies” The 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. It only complies with the contractual requirements.
First a “Ghost Policy” or Owner’s Policy affords a single person owned business the opportunity to bid and work on jobs that a general contractor or project owner requires evidence of WC coverage. However, if you have employees or need workers’ comp coverage (not just a policy to meet a contractual requirement), you’ll need a true workers’ compensation insurance policy — not an owners/ ghost policy. In fact, signing up for an owners / ghost policy when you have employees could lead to serious legal and financial consequences for you and your company.
Typically, these are minimum premium policies that carry a $1,000 -$1,250 cost.
The requirements are no other employees other than the sole proprietor.
- The exposure/class codes must be eligible with the carrier.
- A governing class code is required.
- Minimum payroll of $50,000
As many individual contractors and solo business owners are normally exempt from workers’ comp requirements, this type of policy is designed to help the business owner provide a certificate of insurance (COI) without having to pay for a full workers’ compensation policy.
Not every solo business owner will need an owners / 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. An owners / 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 an owners / ghost policy, have your broker reach out to Green Tree Risk Partners at info@greentreerisk.com.
