A “ghost policy” is a non official term commonly used in construction and contracting. It typically refers to a workers’ compensation insurance policy that is purchased for compliance purposes when a contractor has little or no payroll.

These policies are most commonly requested by:

• Owner only contractors

• Sole proprietors

• Small contractor businesses with no employees

• Contractors who need proof of workers’ comp to bid jobs or satisfy CSLB requirements

California Labor Code requires employers to secure workers’ compensation insurance for employees. If you have employees, even one part time worker, workers’ compensation coverage is required.

This includes many situations contractors do not realize count as employment, such as:

Temporary labor
Helpers paid in cash
Family members working job sites
Workers you supervise, control, or direct

Workers’ compensation is one of the most important legal protections for both the contractor and the worker. It provides coverage for job related injuries and can help protect the business from lawsuits and financial exposure.

The California Contractors State License Board (CSLB) requires contractors to maintain workers’ compensation compliance as part of their license.

Depending on your situation, CSLB may require you to either:

Carry workers’ compensation insurance
Or file a valid workers’ compensation exemption if eligible

If CSLB requires coverage and you fail to maintain it, your license may be suspended or you may be unable to renew an active license.

This is one of the most common compliance issues that causes contractors to lose the ability to legally operate in California.

California Senate Bill 216 changed workers’ compensation requirements for contractors and is expanding the number of contractors who must carry coverage.

SB 216 requires certain CSLB classifications to carry workers’ compensation insurance even if the contractor has no employees.

CSLB has also issued guidance confirming that by January 1, 2026, most active contractors will be required to have workers’ compensation insurance on file, even if they do not have employees.

If you are currently operating with an exemption or have never carried workers’ comp before, it is important to confirm your classification requirements now before you run into licensing problems.

Certain CSLB classifications already require workers’ compensation insurance even if the business has no employees.

Examples of classifications that CSLB has identified as requiring coverage include:

• C 8 Concrete

• C 20 HVAC

• C 22 Asbestos Abatement

• C 39 Roofing

• D 49 Tree Service

If your license includes one of these classifications, you may not qualify for a workers’ compensation exemption.

Step 1: Complete the Online Application
Provide your CSLB classification, entity type, and information about employees or subcontractors.

Step 2: We Review Your Compliance Requirements
We determine whether you qualify for an exemption, owner only policy, or full workers’ compensation coverage.

Step 3: We Help You Secure Proper Coverage
If coverage is required, we help place a compliant policy and assist with providing proof of insurance for licensing and job requirements.

Is a ghost policy legal in California?
A ghost policy is not an official insurance term. What matters is whether the policy is truthful and compliant. Workers’ compensation insurance must be issued based on accurate payroll and labor details. Misrepresentation can lead to serious legal and financial consequences.

Do I need workers’ comp if I have no employees?
Possibly. CSLB requires workers’ comp coverage for certain classifications even if there are no employees. SB 216 is also expanding requirements so that most active contractors will need workers’ compensation coverage by January 1, 2026.

Can I file a CSLB exemption instead of buying workers’ comp?
Some contractors may qualify for an exemption if they have no employees, but exemptions are not allowed for certain classifications and may become less common due to SB 216 requirements.

What happens if I do not have workers’ compensation insurance?
If you are required to carry coverage and do not, CSLB may suspend your license or block renewal. California law also allows penalties for employers who fail to secure workers’ compensation coverage when employees are present.

How fast can I get proof of workers’ comp insurance?
Once your application is submitted and underwriting requirements are satisfied, we can often provide a fast turnaround. Timing depends on classification, entity type, and underwriting approval.