Ghost Policy: Workers' Comp Proof for an Owner with No Employees

What a ghost policy is

A ghost policy is an ordinary workers’ compensation policy that happens to cover nobody. The business has no employees, and every owner is either left off the policy or excluded from it. The insurer still issues a policy number, an information page, and a certificate.

“Ghost policy” is trade slang. Minnesota’s workers’ comp law uses a formal name, a zero estimated exposure policy: one an employer buys after reporting that its total estimated exposure is zero (Minnesota Statutes 176.011, subdivision 19a). The state’s Department of Labor and Industry says it is also called an “if-any” policy. Since January 1, 2026, the estimated exposure on such a policy has been public coverage data in Minnesota (176.185, subdivision 11), and the department said that once the law took effect, its coverage lookup would show when a policy has zero estimated payroll. Minnesota’s 2026 attestation and notice rules for these policies apply only to construction employers.

Whether an owner starts on or off the policy depends on the state and the type of business:

• Sole proprietors and partners are often off by default. California’s Department of Insurance says a sole proprietor’s inclusion must be stated in the policy or added by endorsement (guide revised June 23, 2025). Florida treats non-construction sole proprietors and partners as non-employees unless they choose to be covered and file Form DWC-251.
• Corporate officers and LLC members are often on by default and must take themselves off. California includes corporate officers and directors unless they waive coverage in writing, which an officer who owns at least 10 percent of the stock and has health coverage may do. Florida officers and LLC members file a Notice of Election to be Exempt online.

Texas shows the mechanics. Its approved endorsements let a sole proprietor, partner, or corporate officer be covered or excluded, and an officer who owns at least 25 percent may be excluded. The exclusion endorsement (WC 42 03 08) says the policy does not cover bodily injury to anyone listed in it, and leaves their pay out of the premium.

With no payroll left to rate, you pay the minimum premium. California’s insurance department describes it as the smallest premium an insurer will accept to cover its costs of issuing and servicing a policy, and says each insurer files its own minimum with the department as part of its rating plan. The standard policy form says the final premium will not be less than the minimum premium for the classes it covers.

Why brokers accept a ghost policy

Brokers and health plans check paper. Many ask for a certificate of insurance showing workers’ comp before they send trips, whatever your state requires of a one-person company. A ghost policy produces that certificate, with a policy number, dates, and the employer’s liability limits the contract asks for.

An exemption is the other kind of proof, and it often falls short with a broker:

• Some states issue nothing. Virginia’s Workers’ Compensation Commission says the state has no waiver or exemption form for a sole proprietor, or for any employer that believes it need not insure.
• Some exemptions are only for government. New York’s Certificate of Attestation of Exemption, the CE-200, may be used only to show a government agency that you need no coverage. The New York Workers’ Compensation Board says it may not be used to prove an exemption to another business or that business’s insurer, and a broker is another business.
• Some brokers can ask for a policy anyway. MTM Health’s standard agreement (the January 1, 2023 copy posted by Pennsylvania) accepts a government document showing your exemption, but keeps the right to require coverage even from exempt providers.

A few programs offer their own waiver instead. MediTrans in Louisiana has a workers’ comp waiver form for owner-operators without employees. What each major broker and plan asks for is in the workers’ comp guide, and the rest of the paperwork is in NEMT broker credentialing.

What a ghost policy does not do

• It does not cover you. An excluded owner gets nothing from it. Florida says an officer or LLC member with an exemption is not an employee and may not recover workers’ comp benefits. If you hurt your back loading a wheelchair, the cost falls to your own health or disability insurance.
• It does not freeze the premium. The premium on the information page is an estimate. The final premium is set after the policy ends, from the actual payroll, and the insurer may audit your records during the policy and for three years after it ends. California’s insurance department warns that deliberately underreporting payroll is insurance fraud, and that an employer who refuses an audit may owe three times the estimated premium.
• It does not reach every state on its own. Its workers’ comp coverage applies in the states listed in Item 3.A of the information page, and its other states coverage only in states listed in Item 3.C. Florida, for one, requires an out-of-state employer working there to have Florida listed in Item 3.A, unless a reciprocity rule in the home state’s law lets it work there for a time on its home policy.

When a ghost policy stops being enough

The policy is a ghost only while nobody works for you. Three things end that.

Your first hire. On the standard form, workers’ comp pays the benefits the law requires for your employees, and the premium is based on the pay of all your officers and employees doing covered work. A new driver working in a state listed on your policy is therefore covered and rated, whether or not you told the insurer. Your state may also now require coverage. Florida requires it at four employees outside construction, counting corporate officers and LLC members. New York requires it at the first employee, including part-time and unpaid workers. State-by-state lines are in workers’ comp for NEMT drivers.

Family who help out. New York counts unpaid volunteers, family members included, as employees. A spouse who answers the dispatch phone, paid or not, can mean you need coverage there.

1099 drivers. The standard policy also bases premium on pay to anyone whose work could make the insurer liable, unless you prove that person’s own employer secured coverage. Virginia’s commission warns that your insurer can charge premium for any subcontractor, even a sole proprietor with no employees.

Here is how the audit plays out. Say you run one wheelchair van as an LLC, you excluded yourself, and your ghost policy runs January 1 to December 31 at the minimum premium. On March 1 you hire a part-time driver for 20 hours a week at $18 an hour and do not tell the insurer. By December 31 that driver has earned about 44 weeks of wages, roughly $15,840. At the audit, the insurer finds the payroll, assigns the driver to the right job class, and figures the final premium on the $15,840 at that class rate. If that comes to more than the minimum premium you paid, you owe the balance.

The driver was covered from the first shift, which protects you if the driver got hurt. The bill is what surprises owners. For what an audit checks and how to dispute one, see the workers’ comp audit guide.

How to get workers’ comp proof with no employees

1. Ask each broker or plan what it accepts. A certificate, a state exemption document, or the program’s own waiver form. Get the answer in writing.
2. Check your state’s exemption. Florida issues exemptions to officers and LLC members, not to the business, through an online application the owner must sign personally. In New York, the CE-200 works only with government agencies.
3. If you need a certificate, ask an agent for a policy with the owners excluded. Get quotes from more than one insurer, since each sets its own minimum premium.
4. Match the certificate to the contract. Check the employer’s liability limits, the certificate holder, and any waiver of subrogation. Arizona health plan subcontracts, for one, call for $1 million of employer’s liability for each accident, or $500,000 on subcontracts under $50,000, and a waiver of subrogation in favor of the State of Arizona (AHCCCS terms effective October 1, 2024, revised January 9, 2025). An owner exempt under Arizona law signs the sole proprietor or independent contractor waiver form instead.
5. List every state where you work. If your drivers cross into another state, make sure your information page lists it.
6. Call your insurer before your first hire. Update the payroll estimate and job class, then budget the larger premium. The one-van startup guide covers what else changes when you add a driver.
7. Collect a certificate from every contractor who drives for you, before the first trip.