https://www.insurerbrain.com/w/index.php?action=history&feed=atom&title=Definition%3AGhost_policy 2026-04-30T01:39:23Z Revision history for this page on the wiki MediaWiki 1.43.8 https://www.insurerbrain.com/w/index.php?title=Definition:Ghost_policy&diff=11043&oldid=prev 2026-03-11T17:18:42Z

<p>Bot: Creating new article from JSON</p> <p><b>New page</b></p><div>👻 &#039;&#039;&#039;Ghost policy&#039;&#039;&#039; is a minimal [[Definition:Workers&#039; compensation insurance | workers&#039; compensation]] or [[Definition:General liability insurance | general liability]] policy issued to a business owner who has no employees, carrying a very low or minimum [[Definition:Premium | premium]] and providing little to no actual payroll-based coverage. Its primary purpose is not to insure a workforce but to satisfy a contractual or licensing requirement — general contractors, project owners, and government agencies routinely demand proof of coverage before allowing a sole proprietor or subcontractor onto a job site or into a bid process.<br /> <br /> 📄 The policy is structured much like a standard workers&#039; comp or GL policy, but because no employees exist to cover, the [[Definition:Exposure base | exposure base]] (typically payroll) is zero or nominal. The [[Definition:Insurance carrier | insurer]] charges a minimum premium — often just a few hundred dollars — and the [[Definition:Policy period | policy period]] functions normally, subject to [[Definition:Audit | audit]] at expiration. If the business owner hires workers during the policy term, the audit captures the actual payroll and generates an [[Definition:Additional premium | additional premium]] charge, converting the ghost policy into active coverage. [[Definition:Underwriter | Underwriters]] generally view ghost policies as low-risk, high-volume transactions, though they monitor for situations where contractors use them to mask employees who should be covered.<br /> <br /> ⚠️ Despite its nickname, the ghost policy serves a legitimate market need by keeping sole proprietors from being shut out of contract work. Without it, an independent contractor might lose project opportunities or face penalties for noncompliance with state [[Definition:Workers&#039; compensation insurance | workers&#039; compensation]] mandates. The risk for insurers lies in adverse selection and premium evasion — a subcontractor who quietly adds a crew without reporting payroll exposes the carrier to unpriced [[Definition:Claim | claims]]. Robust audit programs and [[Definition:Certificate of insurance | certificate-of-insurance]] tracking systems help carriers manage this exposure while preserving the product&#039;s accessibility for genuinely solo operators.<br /> <br /> &#039;&#039;&#039;Related concepts:&#039;&#039;&#039;<br /> {{Div col|colwidth=20em}}<br /> * [[Definition:Workers&#039; compensation insurance]]<br /> * [[Definition:General liability insurance]]<br /> * [[Definition:Minimum premium]]<br /> * [[Definition:Certificate of insurance]]<br /> * [[Definition:Premium audit]]<br /> * [[Definition:Subcontractor]]<br /> {{Div col end}}</div>

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