| NYC Business Group
What is a Workers Compensation Ghost Policy?
You could be wondering what we mean by a workers compensation ghost policy. Well, here is what you need to know about a ghost policy.
Ghost policies are often common to one-person businesses. Such business owners choose to take this type of policy that is much affordable and excludes them from the coverage to meet the insurance requirement of their clients. With a ghost policy, a sole entrepreneur can present an insurance policy without paying much for it.
How Does "Ghost Insurance" Work?
A ghost insurance cover is only for business owners without any employees. The policy premiums are minimum, and it excludes the owner from coverage and any benefits. Since the owner does not have any employees in their business, it is safe to say that it covers a ghost!
With worker's compensation policies, the premium price is usually based on the payroll for the year. Since we have no payroll in this case, the premiums tend to be cheaper than those for a policy covering employees.
On purchasing a ghost policy, the business owner is awarded a certificate of insurance, and the policy continues to last for one year.
This type of insurance policy is usually issued to sole proprietors, one-person limited liability companies, a partnership, or a one-person S-corporation, provided the state allows for the owner to be excluded from the coverage of their worker's compensation policy. There should also not be any employees to generate a ratable payroll. Unsure if you qualify for a "Ghost Policy"? Give us a Call Today!
Who is Ghost Insurance For?
Ghost insurance policies are suitable for self-employed entrepreneurs who;
- Do not have any employees or subcontractors in their business
- Do not have any plans to bring in any new employees or subcontractors during the policy period.
- Do not have any payroll besides their own
Subcontractors and other workers who also get electrician insurance, plumber insurance, landscaping, and HVAC insurance are also eligible for this type of insurance policy.
The business owner must also understand that the policy does not cover anyone or have any tangible benefits, hence the word "ghost policy'.
Sole entrepreneurs should also not have plans to hire or subcontract any employees, and in the event, they should notify the insurance agent. Let us be Your Agent! We Will Help You Every Step of the Way!
The Coverage
Ghost policies have no coverage. The main reason small business owners and subcontractors apply for this policy type is to meet a state requirement or have a cheap certificate ready to provide to a client or general contractor who needs one.
Many independent contractors with no employees are trying to avoid paying high premiums to purchase traditional workers' compensation policies. However, since they must show proof of worker's compensation insurance, ghost policies become the most practical solution. After all, they are just looking for an inexpensive way to meet their hiring parties' insurance requirements.
If your job does not have a high risk of injury, you have no prospects of hiring any workers for the next year, and you need to provide proof of insurance, then the ghost policy could be a valid option. We have a great insurance partner who provides low rates, ease of doing business, and stable coverage. Call Us Today & Find Out What Policy Will Work For You!