Workers Comp Ghost Policy for a Business With No Employees
What a ghost policy does, what it never pays, and the two other ways to hand a contractor the certificate he is asking for.
Definition
A ghost policy is a workers comp policy that covers nobody, bought so the insurer will issue the certificate a contract asks for.
A ghost policy is a minimum premium workers comp policy with the owner left off. It insures no one. Its job is to produce a certificate. You have 2 other ways to meet the same contract term. Some states issue an exemption certificate instead, which costs $50 to file in Florida construction. Or you can buy real coverage and add the endorsement that puts you on the policy.
A contractor wants a workers comp certificate before you start work. You have no employees, so there is no payroll to insure. The trade answer is a ghost policy, a policy that covers nobody. In Florida construction a $50 state filing often does the same job. This page prices all 3 routes before you call an agent.
What a ghost policy actually is
A ghost policy is a workers comp policy with no one on it. You buy the policy. The insurer issues a certificate. The certificate is the whole product. Ask how many people the policy insures and the answer is 0.
The owner is left off on purpose. In most states a sole proprietor or LLC member is not his own employee. So nobody is insured by default. The word ghost describes that gap. The paper exists and the coverage does not.
A certificate of insurance is a short form from the insurer. It names the policy, the dates and the limits. It proves a policy exists. It does not prove that any person is covered by it. That gap is why this page exists.
Why the contractor is asking for it
He is protecting his own premium. Once every 12 months his workers comp carrier audits his policy. The audit looks at everyone who worked his jobs. Anyone he paid who cannot show coverage is counted as his payroll. He then pays premium on that money.
| What you hand him | What his audit does with your pay |
|---|---|
| Your own workers comp certificate | Leaves it out of his payroll |
| A state exemption certificate | Leaves it out, where his carrier accepts that proof |
| Nothing | Counts it as his payroll and charges him premium on it |
So an uninsured solo sub is a bill that reaches him after the job ends. Collecting certificates up front is how he avoids it. If you cannot hand him one, he hires the person who can.
That mechanism tells you who the certificate is for. It closes a hole in his audit. It does nothing for you.
How the exclusion works and what happens if you get hurt
California states the rule plainly. A sole proprietor who wants coverage for himself must have that inclusion "clearly stated in the workers' compensation policy or must be added as a coverage endorsement to the policy", says the Division of Workers' Compensation. Without that wording you are not covered. A ghost policy is that gap, sold as a product.
Florida is blunter about the other route. Once an exemption is issued, the officer or member "is not considered an employee of the business and may not recover workers' compensation benefits".
The result is the same either way. Fall on that job site and the ghost policy pays $0. No medical bills, no lost wages, no disability. Your health plan may then call it a work injury and refuse it. That is how a founder ends up paying the whole hospital bill.
That is the honest trade. A ghost policy buys access to the job. It does not buy protection.
How to get one and the two alternatives
3 routes meet most contract terms. Price them together. The cheapest is often not the insurance policy.
| Route | What you get | Who it protects | Where it fails |
|---|---|---|---|
| Ghost policy | A real policy at minimum premium with the owner left off, plus a certificate | The contractor | Pays nothing if you are hurt |
| State exemption certificate | A state document saying you have elected not to be covered | The contractor | Some contractors refuse it, and it also pays nothing |
| Coverage that includes you | A policy with an owner inclusion endorsement | You and the contractor | Costs the most, priced on your own earnings |
For a ghost policy, call a commercial agent licensed in your state. Ask for a minimum premium workers comp policy with the owner left off. Ask for the certificate to go to the contractor direct.
For an exemption, apply to your state, not to an insurer. Florida runs it online as a Notice of Election to be Exempt. Only you may sign it. Florida warns that anyone else who signs "may be guilty of a felony of the third degree".
For real coverage, ask the agent for the owner inclusion endorsement by name. It is the only route of the 3 that pays you.
What it costs
There is no national price for a ghost policy. Any page that quotes one is guessing. Minimum premiums are set by class code and by state. The same solo electrician is quoted 2 different numbers in 2 states. Two quotes from licensed agents is the only real figure.
The exemption route does publish its fees. That is why it is worth checking first.
| Item | Florida cost | Source |
|---|---|---|
| Construction exemption filing | $50.00 per person | Florida DFS |
| Non construction exemption filing | No fee listed | Florida DFS |
| Ghost policy | Carrier minimum premium, quoted by state and class code | Licensed agent |
Going without coverage when you do have employees is the costly option. In California that is a crime under Labor Code 3700.5. The fine is not less than $10,000, or up to a year in county jail. State penalties run up to $100,000. A stop order halts the work until you are insured.
How the answer changes by state and industry
2 questions decide your answer. Your state sets both.
The first is whether your state requires coverage at zero employees. California requires benefits once a business has 1 or more employees. A true solo owner is not forced to carry it for himself. Other states set the trigger elsewhere.
The second is whether your entity can file an exclusion, and what that costs. Florida issues exemptions to officers of a corporation and to members of an LLC. It never issues one to the business itself.
Industry then splits the answer inside one state. Florida construction charges $50 per person and caps the filing at 3 officers or members of a company or group. Florida non construction lists no fee and lets up to 10 LLC members elect out.
| Florida exemption | Construction | Non construction |
|---|---|---|
| Filing fee | $50.00 per person | No fee listed |
| Ownership attestation | At least 10 percent | None for corporate officers, 10 percent for LLC members |
| How many may elect out | Up to 3 officers or members | Up to 10 LLC members |
We do not publish a 50 state table here. The rule turns on entity type and industry in every state. A wrong answer costs a job or a fine. A table that ages badly is worse than no table. Call your own state and ask the 2 questions above.
Where to check and who to call
Start with your state workers comp agency, not an insurer. The state answers the exemption question for free. The insurer only sells the policy.
Two starting points, both read on 21 September 2026. California publishes employer rules and penalties through the Division of Workers' Compensation. Florida runs its exemption system online and lists who can apply by industry.
If you do not know your class code, Florida points people to the National Council on Compensation Insurance on 800-622-4123. Class code drives the minimum premium. It is worth knowing before you ask for quotes.
For the wider question, our guide to business insurance types covers what general liability does and does not do. And do I need business insurance walks through which policies a contract usually wants.
Common mistakes
- Assuming the certificate covers you. It certifies that a policy exists. On a ghost policy the number of insured people is 0.
- Not reading whether you were added. If the agent put you on it, it is no longer a ghost policy and the premium shows that. Ask which endorsements are on the policy.
- Buying a policy when state paper would have done. A Florida construction exemption is $50 and many contractors take it.
- Hiring a helper while holding a ghost policy. The day you pay someone you have payroll the policy does not cover. You inherit the audit problem the contractor was avoiding.
- Letting an exemption lapse. Exemptions are renewed, and an expired one counts as none on audit day.
Frequently Asked Questions
Sources & References
About the Author
Business Formation Researcher
Eliot leads StartupOwl's state data research. He maintains the site's fifty state records of LLC filing fees, annual costs, processing times, and small business grant programs, checking each figure against the state office that publishes it and logging the date it was verified. Based in New Jersey, he has spent his working life in and around small businesses, and he writes for the founder who wants the real number rather than the advertised one. Every figure under his byline traces to a named source, and when a state proves a number wrong, the correction is published, not buried.
Was this article helpful?
Questions about Workers Comp Ghost Policy for a Business With No Employees
No comments yet. Ask the first question and a member of our team will answer.
Leave a comment