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In North Carolina, the insurance industry has a fake or useless piece of paper called a ghost insurance policy.  Usually these policies are used in the construction industry.  General contractors are only relieved of liability for work injuries if they obtain a Certificate of Insurance from the subcontractor.  So, the general contractors ask the subcontractors to obtain a Certificate of Insurance.  When the subcontractor goes to the insurance agent, he asks for a Certificate of Insurance and the insurance agent asks him if he has any employees.  If the subcontractor is a solo proprietor only working by himself, he will say no and the insurance agent is more than happy to take $1,000.00 from the individual and give him a piece of paper that says that he has workers’ compensation coverage.  The reason they call it a ghost policy is because there really is no coverage.  The policy says that if the subcontractor has any employees, they will be provided workers’ compensation coverage.  However, to get the policy, the subcontractor must sign a document promising that he has no employees.  So, no real policy is ever issued.  There is no one who is even covered by this policy.  It is just called a ghost policy, which is a fake piece of paper to protect the general contractor.  Many self-employed or sole proprietors think that this insurance provides protection for them under the workers’ compensation act.  It does not.  Unless the self-employed contractor specifically buys workers’ compensation insurance which covers the owner of the subcontractor, they have no coverage and protection under the policy.

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