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Ghost Workers’ Compensation Policy:
Affordable Coverage for Independent Contractors
Running a business with no employees but still needing proof of workers’ comp insurance? A ghost workers’ compensation policy lets self-employed contractors meet job requirements and protect their business reputation—without paying for full employee coverage.
We partner with the best carriers writing workers' comp ghost policies.
Ghost Workers’ Compensation Policy—What It Is & When You Need It
A ghost workers’ compensation policy (also called a ghost policy or certificate-only workers comp) is a specialized insurance solution primarily used by independent contractors or subcontractors who have no employees but need to satisfy contract or legal requirements for workers’ compensation. Unlike traditional workers' compensation insurance, no actual coverage is provided for injuries under a ghost policy — it serves as a placeholder or certificate.
“It excludes the business owner and provides no coverage for employees or subcontractor injuries unless you later hire staff.”
When & Why You’d Need a Ghost Policy
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Contractual Compliance: Many general contractors demand proof of workers’ comp insurance (a certificate of insurance, COI) before subcontractors can begin work.
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Legal Requirements in Some States: In specific jurisdictions, all entities—even those with zero employees—must carry workers’ comp insurance or at least evidence of it.
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Bidding & Project Qualification: To compete on smaller jobs, independent contractors may need to demonstrate compliance without paying full premium costs.
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Risk Mitigation Strategy: While it doesn’t offer real coverage, a ghost policy can help contractors avoid delays in project start due to compliance checks.
How It Works—Mechanism, Coverage & Limitations
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Certificate Only: The insurer issues a certificate for proof, but no actual benefits are payable unless you hire employees.
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Exclusions: The policy almost always excludes the business owner, employees, and medical benefits for injuries.
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Transition to Full Coverage: If you later add employees or become liable for an uninsured subcontractor, you’ll need to convert to a full workers’ comp plan.
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State Variance: Some states don’t allow ghost policies or impose strict rules. Always check with your state's workers’ compensation board.
What It Does and Does Not Cover
Feature | Covered | Not Covered |
|---|---|---|
State-mandated workers’ comp protections | — | Not a substitute for actual insurance when legally required |
Owner’s injury | ❌ | Explicitly excluded |
Employer liability if you hire employees | — | Excluded unless coverage changes |
Issuance of COI / certificate | ✅ | — |
Employer liability if you hire employees | — | Usually excluded |
Risks, Drawbacks & Alternatives
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No True Protection: If you hire someone and an injury occurs, you may be personally liable.
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Misuse Consequences: Using ghost policies where prohibited may lead to fines or voided claims.
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Alternatives:
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Traditional workers’ compensation policy
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Subcontractor-only endorsements
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Blanket coverage
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Waivers / indemnification clauses (carefully structured)
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How to Get a Ghost Policy — Step by Step
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Verify State Eligibility
Not all states allow ghost workers’ compensation policies. Check your state’s regulations, or let Insure Connecticut LLC confirm eligibility for you. We’re licensed in multiple states and can guide you through every step. -
Request Competitive Quotes
Compare rates from trusted insurers that offer ghost or certificate-only workers’ comp policies. Our team can do the shopping for you—saving you time and ensuring you get the best value. -
Share Your Business Details
Provide basic information such as your trade classification, business type, and experience. This helps us find a policy that fits your exact needs and keeps you compliant. -
Get Your Certificate of Insurance (COI)
Once approved, you’ll receive your COI showing proof of coverage—perfect for meeting contractor or project requirements quickly. -
Stay Compliant as You Grow
Keep good records of your work and team. If you later hire employees, Insure Connecticut LLC can seamlessly convert your ghost policy into a full workers’ comp plan so you stay protected.
Frequently Asked Questions (FAQ)
Q: Can a ghost worker’s comp policy be used in California?
A: California does not allow ghost workers’ compensation policies in most cases. Each state has its own rules, so it’s important to confirm eligibility before applying. Insure Connecticut LLC can help verify whether your state permits ghost or certificate-only workers’ comp coverage.
Q: If I hire someone, will my ghost policy cover them?
A: No. A ghost workers’ compensation policy excludes both the business owner and any employees. If you hire even one worker, you’ll need to convert to a full workers’ compensation policy. Our licensed agents can update your coverage quickly to keep you compliant.
Q: Is this legal in all states?
A: Not all states allow ghost workers comp insurance. Some, like Connecticut and several others, do permit them under specific conditions. Insure Connecticut LLC specializes in helping contractors determine state eligibility and find affordable alternatives if ghost coverage isn’t available in their area.
Q: What happens if I mislead a contractor about coverage?
A: Misrepresenting your workers’ comp coverage can result in legal penalties, denied claims, and loss of business contracts. Always be transparent about your ghost policy’s limits. If you’re unsure, our team can review your certificate and ensure you’re meeting compliance requirements correctly.
Q: How is cost determined for ghost policies vs. full workers’ comp?
A: Ghost workers’ compensation policies are usually much cheaper since they exclude employee coverage. Costs depend on your trade, business classification, and state regulations. Insure Connecticut LLC compares multiple carriers to help you find the lowest ghost policy cost or the best rate for full workers’ comp when needed.