Workers’ Compensation Ghost Policy Insurance

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Ghost Walking Up stairs during the civil warA workers' compensation ghost insurance policy is typically used for self-employed contractors where the owner is excluded from coverage and there are no additional employees for the business. The typical scenario is a contractor is required to have workers' comp in order to work on a given job site by the hiring contractor, even though the policy isn't required by law.

The primary (think general contractor) contractor wants the self-employed contractor to have a workers' comp policy for reasons that include audits and employees working for the self-employed contractor.  The primary contractor doesn't want to get charged for using subcontractors that may be deemed "employees" during an audit. Also, depending on the state, the primary contractor's workmans' comp could become the active policy covering subcontracted workers during an injury.

The solution (if you want to call it that) is for the self-employed contractor to buy the cheapest possible workers' compensation policy available. This can be easier said than done sometimes. Many insurance agents aren't familiar with workers' comp ghost policies, and the ones that are, often don't want to write them because they're time consuming and pay next to nothing in commission. 

This type of policy is really not designed to provide actual workers' comp benefits unless the employer hires employees or becomes liable for an uninsured subcontractor. From that point of view, many self-employed contractors view workers' comp policies as nothing more than paying to get a Certificate of Insurance (COI), and it's hard to argue against that feeling. In Wisconsin, workers' comp premium rates are set by the state, so from a premium point of view it doesn't matter where you buy coverage from. 

What does matter is tha you get a policy from an agent that focuses on business / commercial insurance so you're working with someone that understands the unique needs of commercial insurance including workers' comp.

If you're a general contractor, and/or use sub contractors and require your subs to have workers' compensation, you may want to highly encourage your subs to get coverage from the same agent you're buying coverage from. The reason is quite clear, if one of your sub contractors provides you with a certificate of insurance for their workers' comp policy and then subsequently drops the coverage (for example stops paying the premium), you want the best chance possible that your agent looking out for your best interest will take the time to notify you.

Many business owners that hire sub contractors don't know that insurance agents aren't required to notify you if a policy lapses that a COI was issued for.  Let that sink in for a moment, you could get a COI from a sub, and the very next day the sub can call and cancel the policy and you may or may not find out. This point really illustrate why you want an agent that understands the pitfalls and "gotchas" that many home and auto agents don't encounter and may not know about.

As 1Reason Insurance, we're happy to write whatever policy fits your needs. We also appreciate an opportunity to quote/write all your business insurance including general liability.

We market general liability and worker's comp insurance in Michigan, Minnesota, and Wisconsin.

Cities in Michigan include:

Detroit, Grand Rapids,Warren, Sterling Heights, Lansing, Ann Arbor, Flint, Dearborn, Livonia, Clinton, Canton Westland, Troy, Farmington Hills, Macomb (township), Kalamazoo, Shelby, Wyoming, Southfield, Waterford,

Rochester Hills, West Bloomfield, Taylor, St. Clair Shores, Pontiac, Dearborn Heights, Royal Oak, Novi, Ypsilanti, Battle Creek, Saginaw, Kentwood. If your business is in Michigan, please give us a call as we would love to add your town to the list of places we have active polices in.

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