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Insurance glossary · Workers’ comp and audits

ghost policy.

The short answer

A ghost policy is a workers’ comp policy for an owner with no employees, bought mainly to produce a certificate a customer asks for. It usually covers no one.

Nick McClish, Managing Partner, Riza Risk (licensed insurance agency) · Updated October 1, 2026

Why would someone buy a workers’ comp policy that covers no one?

To get a certificate. Many general contractors won’t let a sub on the job without a workers’ comp certificate, even when the sub is a one-person business with no employees. A ghost policy, usually with the owner excluded, produces that certificate at a minimum premium.

Does a ghost policy cover the owner if they get hurt?

Not when the owner is excluded, which is the usual setup. The owner would have to rely on health and disability insurance instead. In many states an owner can choose to be covered on their own policy, which costs more but actually pays if they’re injured on the job.

What happens if the owner hires a helper?

A workers’ comp policy covers employees of the business, so a helper hired during the year is generally covered, and the premium is adjusted at audit for the payroll. Paying helpers in cash or as 1099 workers without reporting them is where ghost policies go wrong, for the owner and for the general contractor.

Does a ghost policy protect the general contractor?

Only partly. In many states a general contractor can be responsible for a sub’s injured workers if the sub isn’t insured for them. A ghost policy covers the sub’s reported employees, but not an excluded owner, and in some states, like Nevada, that leaves the general contractor exposed for the owner personally.

Is a ghost policy legal?

Yes, in most states. Owners of small businesses are often allowed to exclude themselves, and a policy with no one on it is a real policy. What isn’t allowed is hiding employees to keep the premium down, which can lead to audit charges, penalties and a general contractor’s own policy picking up the claim.

What does a ghost policy cost?

Usually the insurer’s minimum premium for the state and class, plus fees. Because there’s no payroll to rate, the price is set by the minimum rather than the size of the business.

Are there alternatives to a ghost policy?

In some states, yes. Several have official exemption certificates, affidavits or registries a one-person business can use instead, though many apply only to government permits or don’t bind private contractors. New York’s exemption certificate, for example, works for permits but can’t be used as proof for a private general contractor.

How does a general contractor check a sub’s ghost policy?

By reading the certificate and, when it matters, asking whether the owner is included or excluded. Many contractors also ask subs to confirm they have no employees. At audit, payments to subs without a valid certificate can be added to the contractor’s own payroll.

Does a ghost policy work differently by state?

A lot. States differ on whether owners are covered by default, whether a general contractor is liable for an uninsured sub, and whether an official exemption replaces the policy. In the four states where comp comes only from a state fund, owners can only get coverage by electing it with the fund. The notes below cover Riza’s licensed states in detail and every other state in a line.

in the states where Riza is licensed.

Riza is a licensed insurance agency in New York, Colorado, Texas, Florida, Massachusetts, Arizona, Nevada, North Carolina, New Jersey and Georgia. Notes below cite the law they come from. Detailed write-ups cover Arizona, Nevada, Texas, North Carolina and New York. One-line notes for other licensed states appear with them when this term has one.

every other state.

How it works everywhere else, with the rule each line comes from. Riza is not licensed in these states.

by trade.

  • General contractorsGhost policy certificates from one-person subs are common, and it’s worth knowing whether the owner is excluded and whether your state makes you liable for them.
  • Handyman and small tradesSolo operators are the ones most often asked for a comp certificate they don’t legally need, which is where ghost policies come from.
  • RoofingRoofing carries high comp rates and frequent one-person subs, so GCs read roofing certificates closely for owner exclusions.
  • Landscaping and property vendorsProperty management vendor portals often require a comp certificate from every vendor, including owner-only businesses.

where you’ll see it.

  • CertificatesA workers’ comp certificate with an “excluded” box checked for the owner or officers.
  • Vendor requirements“All vendors must provide proof of workers’ compensation coverage,” with no exception for businesses without employees.
  • AuditsPayroll statements showing no employees, or helpers that should have been reported.

the certificate and the coverage should match.

If you work alone, Riza explains your options in your state: an owner-excluded policy, covering yourself, or an official exemption where one is accepted. If you hire help, we make sure they’re on the policy before the audit finds them. For general contractors, we help read subs’ certificates for what they really cover.

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Coverage it touches: Workers’ comp