What is a ghost policy for workers’ compensation?

A “ghost policy” for workers’ compensation refers to a workers’ compensation insurance policy that is purchased by a business even though it has no employees. It’s often called a “ghost policy” because it covers the business owner, who is technically an employee of their own company, even if they don’t have any other employees.

The primary purpose of a ghost policy is to meet legal or contractual requirements. In some states or industries, businesses are required to have workers’ compensation insurance even if they have no employees. For example, a sole proprietor or a business owner without employees may be required to have a workers’ compensation policy to bid on certain contracts, as clients or contractors often want assurance that anyone working on their projects is covered in case of injury.

Ghost policies are typically less expensive than standard workers’ compensation policies because they don’t cover any actual employees. However, they still provide coverage for the business owner (the “ghost employee”) in case they are injured while performing work-related tasks. This coverage can help protect the business owner from personal liability for workplace injuries, and it ensures compliance with legal and contractual requirements.

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