A "ghost policy" is one of the more confusing things in workers' comp — a real policy that covers essentially no one. It's bought by a business with no employees, where the owner excludes themselves, and it exists for one practical reason: to produce a certificate of insurance so a solo operator can land work that requires "proof of workers' comp." Used correctly, it's a legitimate tool. Misunderstood, it leaves an owner thinking they have protection they don't. Here's how it works and who it's actually for.
What is a ghost workers' comp policy?
It's a workers' comp policy for a no-employee business, with the owner excluded from coverage. Workers' compensation is designed to cover *employees* — so a sole proprietor with no employees, who also excludes themselves (as most owners can), ends up with a policy that has no one on it. That's the "ghost." It's a real, in-force policy, usually issued at the carrier's minimum premium, and its main deliverable is a certificate of insurance the owner can hand to a general contractor or client.
Who is eligible for a ghost policy?
Ghost policies are for businesses with no employees where the owner can legally be excluded — generally:
- Sole proprietors
- Single-member LLCs
- Partnerships (where all partners exclude themselves)
A few conditions matter as much as the entity type:
- No employees. The moment you have a W-2 employee, you need a standard workers' comp policy — a ghost policy doesn't fit.
- Subcontractors can disqualify you — and this varies by carrier. Because a ghost policy is priced on the assumption that there's no exposure at all, hiring subcontractors creates a hiring exposure many ghost markets won't accept. The rules genuinely differ from carrier to carrier: some markets won't write a ghost policy for any business that hires subcontractors, period; some will only if every subcontractor carries their own workers' comp; and some don't restrict it up front but will pick up any uninsured sub's cost at the audit. Because a payment to an uninsured subcontractor gets treated as payroll, it can turn a minimum-premium ghost policy into a real, audited premium bill (see misclassification and your workers' comp & GL). Always confirm a specific market's subcontractor rules before relying on a ghost policy.
- The state and the contract have to accept it. A ghost policy only solves your problem where owner-excluded coverage is actually accepted as proof. In some states and trades it isn't — Florida, for example, requires construction-industry businesses (even one-person operations) to carry real coverage, and an owner-excluded policy may not satisfy that. Some states instead issue an exemption certificate that serves the same purpose.
If you have employees, you regularly hire subcontractors, or you're in a state/trade that won't accept owner-excluded coverage, a ghost policy likely isn't the right answer.
What is a ghost policy used for?
Almost always one thing: proof. A general contractor won't let an uninsured sub on the job, a client or property manager requires a workers' comp certificate before work starts, or a permit or license requires it. A ghost policy lets a genuinely solo operator produce that certificate at minimum cost — without buying coverage for employees they don't have.
Does a ghost policy cover the owner?
No — and this is the most important thing to understand about it. The owner is *excluded*, so if the owner is injured on the job, the policy pays nothing. A certificate of insurance proves a policy exists; it does not prove anyone is covered by it (the same trap we cover in should you let a contractor waive workers' comp on your property).
An owner who wants protection for themselves has two options instead:
- Elect in — the owner-only workers' compensation route, where the owner is added to the policy and actually covered.
- Carry separate coverage — a health, accident, or occupational-accident plan that responds to a work injury.
So the clean way to think about it: a ghost policy is for *showing* coverage; owner-only is for *having* it.
What happens at the audit?
A ghost policy is priced on the assumption that there are no employees and no subcontractors. If that changes during the year, the premium audit will catch it:
- Hire an employee, and the policy audits up to a real workers' comp premium.
- Pay an uninsured subcontractor without their own coverage, and that cost can be added to your payroll and charged — exactly as it would on any policy (see misclassification and your workers' comp & GL).
A ghost policy only stays a ghost policy as long as you're genuinely a one-person operation.
Ghost policy vs. owner-only vs. exemption
- Ghost policy — owner excluded; covers no one; exists to produce a certificate.
- Owner-only — owner elected in; the owner is actually covered for work injuries.
- Exemption — a state-issued certificate of non-coverage, used where the state offers it instead of a policy (varies by state and trade).
Same solo-business starting point, three different answers — and the right one depends on your state, your contracts, and whether you want protection on yourself. See also do you need workers' compensation insurance.
Our approach
At Cory Washington & Co., we help solo operators use a ghost policy for what it's good for — a low-cost, legitimate way to show coverage and win work — without the dangerous misunderstanding that it protects *them*. We confirm it'll actually satisfy your state and your contracts, flag when an exemption or owner-only coverage is the better fit, and make sure you understand what happens the moment you hire your first employee or sub.
Need a certificate to win work, or unsure whether a ghost policy is right for you? Request a quote or a policy review and we'll find the right fit.
Frequently Asked
What is a ghost workers' comp policy?
It's a real workers' compensation policy bought by a business with no employees, where the owner has excluded themselves from coverage. Because there are no employees and the owner is excluded, it covers essentially no one — its purpose is to produce a certificate of insurance so a sole proprietor can satisfy a general contractor's, client's, or permit requirement to "have workers' comp." It's typically issued at minimum premium.
Who is eligible for a ghost policy?
Businesses with no employees where the owner can legally be excluded from workers' comp — generally sole proprietors, single-member LLCs, and partnerships. A business with any W-2 employees isn't eligible; it needs a standard policy. Hiring subcontractors can also disqualify you, and this varies by carrier: some ghost-policy markets won't write a business that uses subcontractors at all, some allow it only if every sub carries their own coverage, and some don't restrict it but will charge for any uninsured sub at audit — so confirm the specific carrier's rules. A ghost policy also only helps where the state and the contract accept owner-excluded coverage as proof, which in some states and trades isn't enough.
Does a ghost policy cover the owner if they get injured?
No. The whole point of a ghost policy is that the owner is excluded, so there are no benefits if the owner is hurt on the job. An owner who wants protection for themselves needs to elect in (owner-only coverage) or rely on a separate health, accident, or occupational-accident plan. Treating a ghost policy as if it protects the owner is a common and costly mistake.
This article is general information for business owners, not insurance or legal advice, and does not bind or alter coverage. Policy terms, eligibility, and pricing vary by carrier and state — confirm specifics with our licensed team before making decisions.