You have no employees. Your state does not require you to carry workers' compensation. You know this, your accountant knows this, and it is correct.
Then a general contractor tells you that you cannot start Monday without a certificate showing workers' comp in force. That is not a misunderstanding on their part, and arguing about your exemption will not move them. The instrument that resolves it is called a ghost policy, and understanding exactly what you are buying — which is considerably less than it looks like — is worth ten minutes before you spend a thousand dollars.
What a Ghost Policy Actually Is
A ghost policy is a workers' compensation policy written on $0 payroll. The owner files an exclusion removing themselves from covered payroll, and there are no employees to cover. Because the policy insures nobody at the moment it is issued, carriers price it at a minimum premium rather than as a percentage of wages. It is also sold as an "if any" policy, which is the more descriptive name: it responds if any employees exist.
That produces the central paradox. The policy issues a real certificate of insurance, identical in form to one backing a fully staffed crew, while providing no benefits to you. If you fall off a ladder on that jobsite, your own ghost policy pays nothing — no medical bills, no lost wages, no disability. You are relying on personal health insurance, if you have it.
It is not a scam and it is not a loophole. It is the mechanism the industry built to reconcile two rules that conflict: your state exempting solo operators, and your client's contract requiring proof of coverage from everyone on site.
What It Costs
Because there is no payroll to rate, the price is a floor set by the carrier or the state rather than a calculation. Published ranges cluster tightly:
| Source type | Typical annual minimum premium |
|---|---|
| National online brokers | ~$750–$1,200 |
| Contractor-focused agencies | ~$500–$1,500 |
| Commonly quoted rule of thumb | ~$1,000 |
| High-hazard classifications (roofing, tree work, structural) | Can reach several thousand |
The variable that moves it most is your classification code, not your state. A landscaper and a roofer buying identical $0-payroll policies can be separated by a factor of several, because the minimum premium is anchored to what the class would cost if there were payroll. If your quote looks far above these ranges, the first thing to check is whether the classification assigned matches the work you actually do.
The Refund Most Solo Contractors Never Claim
Ghost policies are audited at the end of the term like any other workers' comp policy. If you genuinely had no employees during the policy year, and you can produce certificates from any subcontractors you paid, you may qualify for a partial return of premium at audit. Many solo operators never respond to the audit request at all, which forfeits the possibility and can trigger a non-compliance charge instead. Answer the audit, keep the certificates, and ask about the return.
Why General Contractors Are Getting Wary
This is the part that is changing, and it is worth knowing before you assume a ghost policy will satisfy everyone.
The GC's concern is not the solo operator getting hurt — they are usually not liable for that. The concern is the employee the solo operator hires next week. A ghost policy technically does cover employees hired during the policy period, which is why courts have generally upheld these policies as legitimate: the carrier accepts a contingent risk. But the arrangement is also used to disguise actual employees as independent contractors, and it unravels at exactly the wrong moment — when one of those workers is injured, and the GC, the state agency, and the injured worker's attorney all start asking who was working for whom.
Some GCs now decline ghost policies outright, or require additional documentation alongside them. Others accept them without comment. Ask before you buy, because the answer determines whether the $1,000 solves your problem.
There is a second and more common rejection reason: endorsements. If the contract requires a waiver of subrogation, an exemption certificate cannot supply one because there is no policy to endorse — a ghost policy can. If the contract requires you to be additional insured on someone else's policy, that is a different instrument entirely. Our guide to insurance requirements in contracts covers which line asks for what.
Exemption Certificate vs Ghost Policy: Which One Do You Need?
| State exemption certificate | Ghost policy | |
|---|---|---|
| What it proves | You are not required to carry coverage | A policy is in force |
| Cost | Free or a small filing fee | ~$500–$1,500/yr |
| Produces an ACORD certificate | No | Yes |
| Can carry a waiver of subrogation | No | Yes |
| Covers employees you hire later | No | Generally yes |
| Covers you personally | No | No |
Start with the exemption certificate, since it is free. Buy the ghost policy when the client will not accept it — which, in construction, is most of the time.
What a Ghost Policy Does Not Solve
- Your own injuries. The single most important thing to understand. If you do physical work alone, look at an occupational accident policy or disability coverage as the thing that actually protects your income — our disability insurance calculator sizes that.
- General liability. Workers' comp and GL are separate coverages, and a certificate showing one does not evidence the other. Clients frequently require both.
- The moment you hire someone. Once you have an employee, you generally need a real policy with real payroll reported. Continuing to run a $0-payroll policy while paying workers is where this stops being a paperwork convenience and starts being a serious problem at audit.
- Licensing mandates. A growing number of states are requiring licensed contractors to carry coverage regardless of employee count. California is the largest example — see our guide to the CSLB workers' comp requirement and the SB 216 timeline.
Bottom Line
A ghost policy buys you a certificate, not protection. At roughly $500 to $1,500 a year it is usually the cheapest route to a jobsite when a contract demands proof of workers' comp and your state says you are exempt. Check with the GC that they accept one before you buy, respond to the year-end audit to pursue a premium return, and be clear-eyed that if you are hurt on that site, the policy in your file pays you nothing.
Frequently Asked Questions
What is a workers' comp ghost policy?
A ghost policy is a workers' compensation policy written on $0 payroll, also called an 'if any' policy. The owner files an exclusion removing themselves from covered payroll and there are no employees, so the carrier charges a minimum premium rather than rating actual wages. It issues a real certificate of insurance while providing no benefits to the owner - if you are injured, it pays nothing toward your medical bills or lost wages.
How much does a ghost policy cost?
Published ranges cluster around $500 to $1,500 a year, with roughly $1,000 the commonly quoted rule of thumb and national brokers often citing $750 to $1,200. High-hazard classifications such as roofing or tree work can reach several thousand. Classification code moves the price more than state does, because the minimum premium is anchored to what the class would cost if payroll existed.
Does a ghost policy cover me if I get injured?
No. The owner is excluded from the policy, so a ghost policy pays nothing toward your own medical bills, lost wages, or disability benefits from a work injury. You would be relying on personal health insurance. If you do physical work alone, an occupational accident policy or individual disability coverage is what actually protects your income.
Will a general contractor accept a ghost policy?
Often, but not always, and acceptance is narrowing. GCs are increasingly wary because the arrangement is sometimes used to disguise actual employees as independent contractors, and it unravels when one of those workers is injured. Some GCs now decline ghost policies outright or require extra documentation. Ask before you buy, since the answer determines whether the purchase solves your problem.
Can I get money back from a ghost policy?
Possibly. Ghost policies are audited at the end of the term like any other workers' comp policy, and if you genuinely had no employees during the year and can produce certificates from any subcontractors you paid, you may qualify for a partial return of premium. Many solo operators ignore the audit request entirely, which forfeits the refund and can trigger a non-compliance charge instead.
Do I need a ghost policy if my state exempts me?
Not by law, but often by contract. Start with your state exemption certificate, which is free or nearly so. It proves you are not required to carry coverage, but it does not produce an ACORD certificate and cannot carry a waiver of subrogation. When a client's contract requires either of those - which in construction is most of the time - the ghost policy is the instrument that satisfies it.
This content is for informational purposes only and does not constitute insurance, financial, or legal advice. Workers' compensation statutes, exemption rules, licensing requirements, and penalty amounts vary by state and are amended frequently — verify current rules with your state agency or licensing board before acting. Premium figures are illustrative industry ranges rather than quotes. Consult a licensed broker or attorney about your specific situation.