For many contractors, buying a Minnesota workers' compensation insurance ghost policy means buying one through the Minnesota Workers' Compensation Assigned Risk Plan, commonly called "the pool".
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It's an insurance policy no one wants to buy, and for good reason, it provides zero benefit to the policy owner. The only reason we sell them is because sub contractors are often required to buy one to satisfy their general contractor's contract requirements. I believe it's the unintended consequences of questionable legislation and a good demonstration of how regulation takes money out of the wallet of working people. I also think most if not all buyers of ghost policies would agree, at least in this case. Usually, contractors that are required to have a workers compensation policy are also required to have a commercial general liability policy and/or a commercial auto policy.
If you're not sure what a "workers' compensation ghost policy" is, and you want details, I wrote a few articles on the subject. The first is appropriately titled "Workers' Compensation Ghost Policy Insurance", which will provide greater insight as to what it is, and especially what the policy isn't. The second is the first article I wrote specifically about workers' comp in Minnesota, and is titled "Minnesota Workers' Comp Pool Alternative", which this article follows up on.
To be clear, if you qualify as one of the class codes available to buy a policy outside of the MN Assigned Risk Plan, you can save money, and the policy is often easier and faster to buy. My most common contractors buying a policy outside of the pool are sheetrock installers, painters, flooring, masonry, cabinet installers, framers, landscapers, lawn care, and many others. Not everyone can get a ghost policy outside of the assigned risk plan though, and for them, this article is to let you know there are insurance agents that will still write a policy for you.
For example, we usually place roofers and other higher risk classifications into the workers' comp pool.
You may think that any agent would be excited to write these types of insurance policies, but you would be wrong. The reason is simple, for many agents, after adding in office and other related expenses, the hourly net compensation rate is less than minimum wage. It's easy to understand why when you break it down.
Because workers' comp ghost policies are so small in size, often the only true "cost" is the expense constant that is less than $300 at the time of writing. With a commission of perhaps 5%, it's worth about $15 to the agent before expenses. Add up the expenses for training, office, marketing, licensing, accounting, etc… and writing a policy that pays a $15 commission (it's actually much less at the time of writing) can result in a loss for the insurance agent. If done properly, an agent can easily spend two hours writing a policy and doing a minimal amount of service work. That results in less than minimum wage.
So if you were wondering why your home and auto agent "doesn't write workers' compensation insurance policies", it may not be because they don't write them, it may be because they don't want to write one that they will spend a couple of hours on and make so little with. Add in opportunity cost, and the agent may think that if they lose out on another sale because they're writing a ghost policy, they'll lose money. And they would be right. After calling your home and auto agent, you may have tried calling others to hear much of the same, and that's what may have brought you here.
The good news is that we will work with you to get a workers' comp ghost policy. The reason we can do so is we believe you deserve quality insurance advice and we're here to service your account, regardless of size. We also know that once contractors get an idea of how good our service is, they'll either let us quote their commercial general liability insurance, or move the current policy into our agency.
It doesn't matter if you're in Saint Paul, Minneapolis, Rochester, Ortonville, Alexandria, Albert Lea, or north in Duluth, Virginia, or Warroad, we'll be happy to assist you in gaining a ghost insurance policy.
Let me end with this, and while it's a sale's pitch, that doesn't make it any less applicable to you. If you're working and you decide to not enroll in workers' compensation because you don't want the added expense. Please consider a disability income insurance policy. We offer them in all shapes and sizes that can fit just about anyone's budget. Usually, if you're in good health, and most of my contractors are, you can get a disability income policy for less than the cost of workers' compensation. Plus, a disability income insurance policy will cover you 24 hours a day, seven days a week, while a workers' comp policy only covers you while working.
A disability income insurance policy isn't a total replacement for workers' comp, for example, a disability policy doesn't cover for hospital or doctor expenses, and that can amount to a lot of money very quickly. But if you already have health insurance anyway, a disability policy can start to make sense really quick. Many people tell me after receiving a quote that the premium cost is less than they expected, especially when compared and contrasted with workers' comp. A disability policy is your family's protection to make house, car, and other payments when you're out of work because your hurt. And because you're more likely to have a family financial crisis from disability than from death, it makes sense to at least take a look at it.
Regardless, if you're working in Minnesota, we're here to help you get the proper insurance coverage you want and need, at a great price, and especially with the very best in service. That includes a standalone workers' compensation ghost insurance policy.