North Carolina Workers Compensation Ghost Policy Explained

You may not know that in North Carolina, it’s legal for the insurance industry to accept payment for a fake or entirely useless document called a ghost insurance policy. This piece of paper is issued without insurance coverage for any active employees. It is mostly used to satisfy licensing needs or contractual requirements. Let’s explore how a North Carolina workers’ compensation ghost policy could impact you as a business owner or employee.

Ghost Insurance Policies

In the context of North Carolina workers’ compensation insurance, a ghost policy allows companies to show they’ve satisfied the state requirement to have purchased insurance coverage when they, in fact, have not actually covered any employees in the event of a work-related accident or illness.

Often, these fake policies are utilized by the construction industry. If a contractor gets a Certificate of Insurance, they are relieved of legal responsibility for work injuries and illnesses. As a result, they often ask their subcontractors to get a Certificate of Insurance before beginning work.

Subcontractors then go to an insurance agent to purchase a Certificate of Insurance, who in turn asks whether they have any full-time employees. If they’re self-employed without any employees or plans to hire any, the insurance agent takes the subcontractor’s money and issues a simple piece of paper promising phony workers’ compensation coverage. In case of a work injury, the subcontractor doesn’t have coverage since they didn’t purchase an actual contract.

Additionally, contractors and small business owners may use ghost policies to:

• Meet NC general contractors’ requirements that they have workers’ comp insurance
• Meet licensing requirements
• To bid on contracts requiring a certificate of insurance

Ghost insurance policies might feel like an insurance loophole, and it’s important for employers and employees to understand that proper workers’ compensation coverage is essential for protecting workers in the event of a workplace accident or illness. In short, a ghost policy does not provide any workers’ compensation benefits.

For business owners, it’s important to know that these policies are typically subject to formal audits to make sure businesses are complying with the policy’s conditions and have not hired any employees since the ghost policy was purchased. Also, you may be asked to formally acknowledge that you’re exempt from the state laws requiring workers’ compensation for all employees before a carrier issues a ghost policy.

North Carolina Data

When self-employment was last studied in the U.S. in 2015, approximately 15 million people were self-employed, which equaled about 10.1% of all workers in the U.S.

Many businesses throughout the Tar Heel State operate without any employees or subcontractors, which means businesses in your area may purchase ghost insurance policies. The Bureau of Labor Statistics further reports that self-employment rates remain high throughout North Carolina, and a significant proportion of these are unincorporated without employees.

When last examined, North Carolina recorded about 16,000 ghost insurance policies out of a total of 140,000 policies written in one year. Throughout our state, ghost policies are purchased by partnerships, sole proprietors, businesses without any employees, and high-risk companies that are unable to get traditional NC workers’ compensation insurance coverage.

Seeking Help With Workers’ Compensation Claims

With so many policies being purchased throughout North Carolina, if you are hurt or injured due to your job, contact an experienced workers’ compensation attorney right away. They can make sure your company is following the state’s requirements for workers’ compensation and protect your rights.

Workers’ compensation is supposed to help employees recover quickly and to offset the financial impact of serious injuries and illnesses. It can be hard to get your benefits, and an attorney can provide reliable legal help through the claim process. They can explain all available avenues of recovery to get the full compensation you deserve for your injuries.

FAQs

North Carolina Workers’ Compensation Attorney

To learn more about ghost insurance policies and state-mandated workers’ compensation benefits, contact the experienced team at The Sumwalt Group. Our attorneys have helped employees throughout North Carolina. We’ve helped employees manage their workers’ comp claims, file third-party claims, and pursue personal injury claims in state court.

Whether you live in New Bern or Charlotte, contact our office to hear more from reliable attorneys. Contact The Sumwalt Group today to schedule a free consultation.