The basics
A 'ghost policy' is a workers' comp policy that covers only the business owner (officer/partner) with no employees on the payroll. The state still gets a workers' comp certificate of insurance, but premium is typically $700-$1,500 per year because there's effectively no payroll to rate.
Why it matters in 2026
Ghost policies exist because many states and general contractors require a workers' comp COI before they will hire a subcontractor — even if that subcontractor is a sole proprietor with no W-2 employees. The ghost policy satisfies the COI requirement at a fraction of the cost of full payroll coverage.
How it actually works
Watch the rules carefully. If you hire even a single 1099 contractor who could be reclassified as an employee, or take on a W-2 employee mid-policy, you must convert the ghost policy to a full payroll policy or face audit penalties at year-end.
Common pitfalls
Ghost policies do NOT cover injury to the owner (in most states) unless you also elect officer coverage. If you want injury protection for yourself, ask for an officer-included quote and compare against a separate accident or disability policy.
Practical recommendations
Carriers that frequently quote ghost policies: Pie Insurance, biBerk (Berkshire Hathaway), Hiscox, NEXT Insurance, and most state-fund workers' comp programs. Always confirm with the GC or hiring entity that a ghost policy satisfies their COI requirement before binding.
Key takeaways
- Understand the structure before you shop.
- Compare quotes from at least three carriers.
- Document everything and revisit coverage annually.
- Pair with related coverage for full protection.
Related reading on InsureLab
Sources & further reading
Frequently asked questions
What is a ghost policy?+
A workers' comp policy that covers only the business owner with no employee payroll, used to satisfy general contractor or state COI requirements at minimum cost.
Is a ghost policy legal?+
Yes, in nearly every state. It's a standard product. Just don't hire even one employee or 1099 contractor without converting it to a full payroll policy.
Does a ghost policy cover the owner?+
Usually no — owners are excluded by default. To cover yourself, ask for officer-included coverage at additional premium, or rely on personal accident/disability insurance.
How much does a ghost policy cost?+
Typically $700-$1,500 per year, depending on state, business class code, and minimum premium rules.
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