Payroll Protection & Premium Control
Understand how workers' comp premiums are calculated, why ghost policies minimize your exposure, and how to manage your WC costs as your business grows.
How WC Premiums Are Calculated
Workers' compensation premiums are not flat fees. They're calculated using a specific formula that accounts for your trade's risk level, how much you pay workers, and your claims history:
For ghost policy holders: ($0 / 100) × Rate × 1.0 = $0 → pays Minimum Premium only
Here's how each component of the formula works for a ghost policy holder:
Ghost Policy vs. Staffed Policies
The Ghost Policy Payroll Advantage
Four ways a ghost policy protects your bottom line compared to standard workers' comp.
Minimum Premium = Maximum Savings
Ghost policy holders pay the carrier's minimum premium — the absolute floor cost of the policy. There is no payroll exposure to push the premium higher.
Zero Audit Risk
Since payroll is $0, your end-of-year audit always closes with no additional amount due. Surprise audit bills simply cannot happen.
Predictable Annual Cost
Know exactly what you'll pay at renewal, year after year. No fluctuating premiums tied to how many hours you worked.
Easy to Scale Up Later
When you're ready to hire, notify your carrier to add payroll. Your policy converts from ghost to a standard WC policy seamlessly.
What Happens When You Hire Employees?
Your ghost policy doesn't trap you — it transitions smoothly when your business grows.
Notify Your Carrier
Contact us as soon as you hire your first W-2 employee. This triggers a payroll endorsement.
Estimate Annual Payroll
Provide the carrier with projected annual wages for each new employee by class code.
Premium Is Recalculated
Your premium adjusts from minimum premium to the rate-based calculation for actual payroll.
Year-End Audit
The carrier audits actual wages paid. Adjustments are made — additional premium or refund.
Pay-As-You-Go vs. Traditional Premium
Two ways to structure your premium payments — which is right for your business?
Protecting Yourself from Audit Exposure
Follow these best practices year-round to keep your audit clean and your premiums predictable.
Premium & Payroll FAQ
Common questions about workers' comp premiums and payroll calculations.
Control Your WC Premium Today
Get the lowest possible workers' comp premium for your owner-only business. Instant quote, same-day coverage.