TL;DRWC premium is: (class-code rate × payroll ÷ 100) × experience mod × carrier-level factors. A sole-owner LLC ghost policy starts around $750/year. An 8-employee contractor with a 1.15 mod in GA pays $12K–$28K depending on class codes.
When you need WC
| State | Employee Threshold | Monopolistic? |
|---|
| Georgia | 3+ employees (includes part-time) | No — private market |
| Florida | 4+ non-construction; 1+ construction | No — private market |
| South Carolina | 4+ employees | No — private market |
| North Carolina | 3+ employees | No — private market |
| Tennessee | 5+ employees (more for construction) | No — private market |
Ghost policies — sole proprietors who need a WC cert
A "ghost policy" is a minimum-premium WC policy covering only the owner (excluded from coverage) so you have a valid WC certificate to show GCs or customers. Typical cost: $750–$1,200/year. AmTrust and Summit are the usual markets. Most Southeast GCs now require ghost policies from their 1099 subs even when WC isn't legally mandated.
Experience modification factor (E-mod)
Your E-mod is calculated by NCCI (most states) or your state's bureau and compares your losses to expected losses for your class codes. Above 1.00 you pay a penalty; below you get a credit. Published annually. How mod rates affect your premium.
High-mod strategies
- Close open claims fast. Reserves drive mod even before payments.
- Return-to-work programs. Light duty reduces indemnity payouts and mod impact.
- Challenge reserve amounts. NCCI uses reserve amounts from carriers; you can dispute excessive reserves.
- Market to high-mod carriers. Summit, AmTrust, and Normandy write accounts with mods 1.25+. Standard carriers don't.
Full playbook: Contractor workers comp mod reduction.
Pay-as-you-go WC
Traditional WC bills upfront based on estimated payroll, then audits at year-end. Pay-as-you-go integrates with your payroll provider (Gusto, ADP, Paychex) and charges actual payroll each pay period — no audit surprises. Carriers offering: AmTrust Pay-As-You-Go, The Hartford XactPay, Employers PEO.
Class-code accuracy — where overpayments hide
The single most common WC overpayment is miscoded payroll. A clerical office worker coded as general construction pays 20x the correct rate. We audit every client's existing classification at quoting and often find $2K–$15K in annual savings just from correct coding.
Carriers we use
AmTrustSummitThe HartfordAcuityHanoverNormandyEmployersTravelers
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Get a Free Risk Review →Frequently Asked Questions
What is a ghost policy?
A minimum-premium WC policy that excludes the owner, issued so a sole-proprietor LLC or single-member S-Corp can produce a valid WC certificate to a GC or customer. Cost: $750–$1,200/year. Legal in all Southeast states.
How is workers comp premium calculated?
(Class code rate × payroll per $100) × experience mod × schedule/carrier credits. A $400K payroll on a 9083 restaurant class at $1.65 rate × 1.00 mod = $6,600 base WC. Then carrier credits reduce (or schedule rating increases) final premium.
My mod is above 1.0 — who will still write me?
Summit and AmTrust write mods up to 1.40. Above that you're typically looking at the state's assigned risk pool. The faster path to a lower mod is closing open claims and tightening your safety/RTW program.
Can I switch WC carriers mid-term?
Yes — issue an Agent of Record and cancel the old policy pro rata. Final audit from the outgoing carrier comes 30–60 days after cancel. New policy picks up the remaining term.
Do 1099 contractors count as employees for WC?
Generally no if they're legitimately 1099. But if you fail to collect their WC certificate (or their ghost policy), the auditor will charge YOU premium on their payroll at your next WC audit. Collect certs and keep them on file.
What's pay-as-you-go WC?
A WC structure that integrates with your payroll provider and charges WC premium based on actual payroll each pay cycle — instead of estimating upfront and auditing at year-end. Eliminates audit surprises. AmTrust, Hartford, and Employers offer it through most major payroll platforms.