Plain-English guide
The phrase usually means an owner-excluded workers' compensation policy with no employee payroll. It can be useful evidence for a contract. It is not a substitute for coverage a real worker needs.
Check the fitA ghost policy is an informal name for a workers' comp policy structured around zero employee payroll and an owner exclusion, when the law and insurer permit it.
The important distinction
An excluded owner should not expect that policy to pay the owner's medical bills or lost wages after a work injury. If you want protection for yourself, say so before the policy is placed so the agent can discuss available alternatives and owner-inclusion rules.
How it works
Eligibility, exclusions, certificates, and audits should each be reviewed. A correct answer in one step does not fix an incorrect answer in another.
The application starts with the entity, ownership, state, type of work, employee count, subcontractors, and estimated payroll. Calling a worker a contractor does not settle their legal status.
Where permitted, a qualifying owner, officer, member, or partner may be excluded by the policy or a state filing. The exact rule and form vary by state and entity type.
With no employee payroll estimated, the insurer may charge its minimum premium. That is an underwriting result, not a universal price, discount, or promise about the final audit.
A certificate can summarize an in-force policy for a client or general contractor. It does not create coverage, add rights, or override exclusions that are not in the policy itself.
State rules are not uniform
A sole proprietor may be exempt in one state, a particular contractor class may still need coverage, and another state may use a different owner-election process. Contract requirements can also be stricter than the minimum required by law.
The Virginia Workers' Compensation Commission says a sole proprietor with no employees and no subcontractors is not required by law to carry coverage, but may obtain it voluntarily.
Read the commission's guidanceCalifornia requires employers to carry workers' comp even with one employee. CSLB also identifies contractor classifications that must carry coverage even without employees.
Read CSLB's current rulesNew York says a sole proprietor with no employees is generally not required to carry workers' comp, while noting that a general contractor may still require a policy as a condition of work.
Read the board's guidanceInsurance regulators consistently warn that a certificate cannot expand or change the underlying policy. Confirm requested endorsements in the policy itself, and never assume the certificate gives an excluded owner benefits.
See the Texas Department of Insurance certificate FAQPrepare for the audit
Save payroll reports, general ledgers, tax forms, and certificates for insured subcontractors. If the audit finds employee payroll or uninsured labor, the carrier may calculate additional premium under the policy terms.
Sources and review date
Reviewed September 2, 2026. Rules and carrier practices can change. The linked agencies are starting points, not a substitute for current state-specific advice.
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