An NC workers’ comp ghost policy is a policy that insures no one.
The purchase of such a policy results in a certificate of insurance that a company can use to prove it has purchased “coverage” when it enters into a contract to provide work for a principal contractor.
Why Businesses Use Ghost Policies in North Carolina
Under NCGS 97-19, a principal contractor must provide workers’ compensation insurance for every worker on a project. However, the principal contractor can fulfill this obligation by requiring all its subcontractors to provide either a certificate of insurance from a workers’ compensation carrier or a certificate of compliance from the Department of Insurance.
Some independent subcontractors have no employees of their own, so it makes little sense for them to purchase a workers’ compensation insurance policy for employees they do not have. In such cases, a ghost insurance policy serves as a certificate of insurance, even though the policy provides no actual insurance. Ghost policies cost substantially less than those that actually provide coverage.
Are Ghost Policies Legal in NC?
Ghost policies for workers’ comp are legal in North Carolina, although they are banned in 23 other states. In other words, North Carolina businesses with no employees can legally use ghost policies.
However, not all businesses in North Carolina use ghost policies correctly. Some employers attempt to bypass the requirement to purchase workers’ compensation insurance by misclassifying their workers as independent contractors rather than employees. These companies can run into trouble if they have signed a contract with a contractor and one of that contractor’s employees is injured on the job.
Situations like that can result in penalties from the North Carolina Industrial Commission, in addition to the cost of the injured worker’s medical care and other expenses.
What Coverage Does a Workers’ Comp Ghost Policy Include?
The only benefit of a ghost policy for workers’ compensation in NC is that the business owner has a certificate of insurance to present when they sign work contracts. Workers’ comp ghost policies provide no actual coverage, not even for the business owner who took out the policy.
Since the ghost policy provides no workers’ compensation benefits, if the business owner later hires employees or decides to obtain workers’ compensation insurance for themselves, they will have to convert their ghost policy to an actual workers’ compensation policy.
A full workers’ comp policy in North Carolina should provide medical benefits, lost wage benefits, and permanent impairment benefits for an employee injured on the job. A workers’ compensation ghost policy, on the other hand, provides none of these.
Get Help from Our North Carolina Workers’ Compensation Attorneys Now
Were you injured on a jobsite only to discover that your employer does not actually have workers’ compensation insurance? The North Carolina workers’ comp lawyers at Kornbluth Ginsberg Law Group, P.A., want to help you.
We have decades of combined experience in workers’ compensation and personal injury law, and we are skilled at pursuing the benefits our clients are owed.
Contact our office today or call us 24/7 at 919-980-9895 for a free consultation, and let’s talk about what we can do for you.
We have an office conveniently located at 3400 Croasdaile Drive, Suite 300. Durham, NC. We are ready to help you understand your legal options.
