If you have purchased a workers compensation "Ghost" insurance policy, you may be entitled to a refund
Attorney
(866) 735-1102 Ext 645
Tags:
None
Insurance companies collect millions of dollars from North Carolina citizens paid as premiums for insurance policies which provide absolutely no insurance. The insurance industry practice of issuing these "no insurance" policies has become so widespread that this particular type of policy has earned a special name in the insurance industry. These policies are appropriately referred to as "ghost policies". The term "ghost" refers to the fact that the insurance company will never have to pay a claim for these policies.
Why would anyone buy an insurance policy, which provides absolutely no insurance and for which they will never receive any benefit?
The answer lies in a strange quirk in North Carolina's Workers' Compensation law.
The law imposes an obligation upon general contractors to pay workers' compensation claims for injured employees of a subcontractor hired by the general contractor. If the subcontractor does not carry workers' compensation insurance. Because of this obligation, general contractors require from a subcontractor proof that the subcontractor carries workers' compensation insurance to cover the employees of the subcontractor.
Many subcontractors do not have employees, but instead work as sole proprietors working without any employees. An example would be plumbers, electricians, truck drivers, and other tradesman who are not regularly employees of the contractor that work as subcontractors and who have no employees.
Although the general contract has no obligation to the subcontractor to pay workers' compensation benefits for injuries, the general contractors still require the subcontractor with no employees to purchase workers' compensation insurance.
The insurance industry has accommodated this demand from general contractors for workers' compensation insurance by issuing a "ghost policy" to independent contractors who have no employees. These policies of insurance do not provide insurance coverage to the independent contractor because he or she is not an employee, but is the owner of the business. Since the subcontractor has no employees, there could never be any claim against the policy since there are no employees to insure.
Because of this unusual circumstance, the insurance company is never at risk on these policies. That is, there is no circumstance under which the insurance companies would ever be liable for a claim.
North Carolina law is clear that an insurance company is not entitled to any premium for insurance policies under which the insurance company is never at risk.
If you were forced by a general contractor for an employer to buy a workers' compensation insurance policy and if you never had any employees during the time, the policy was enforced, you may very well be entitled to a refund of all the premiums you've paid for any such policies.