Most Michigan businesses need workers' compensation once they cross the state's coverage test, general liability that clients and landlords insist on, and property or a package policy for their equipment. Workers' comp is the coverage Michigan law actually forces on you: under the Worker's Disability Compensation Act, a private employer must carry it once it regularly has 3 or more people working at one time, or has even one person working 35 or more hours a week for 13 weeks or longer in the past year (MCL 418.115).
Who this is for: Michigan owners, from a one-van contractor in Grand Rapids to a 20-person shop in Warren, who want to know what the state requires, what their contracts require, and how to buy it without overpaying.
The short version
- Workers' comp turns on a headcount-and-hours test, not one employee. A private employer needs it with 3 or more people working at one time, or one person working 35+ hours a week for 13+ weeks (MCL 418.115). Every public employer must carry it whatever the count.
- Part-time workers count toward the 3-person test, so three part-timers on the clock at once can trigger coverage.
- Owners get special treatment by entity type. A sole proprietor is never counted, while working partners, corporate officers, and LLC manager-members count unless they formally opt out on a state form.
- General liability is not a state mandate, but nearly every lease, client contract, and general contractor requires it before you can start work.
- You buy on the open market. Michigan has no state fund, so private carriers compete for your business, with an assigned-risk plan (the Michigan Workers' Compensation Placement Facility) as the backstop if you are hard to place.
What Michigan actually requires
Only a couple of these are true legal mandates. The rest get required by the people you do business with, which in practice is just as binding.
| Coverage | Required by Michigan law? | Who needs it | What is at stake |
|---|---|---|---|
| Workers' compensation | Yes, once you meet the MCL 418.115 test | Private employers with 3+ at once or one 35+ hour, 13+ week worker; all public employers | Misdemeanor charge, daily fines, a direct injury lawsuit |
| Commercial auto | Yes, if you own or use business vehicles | Any business-owned or leased vehicle | Registration problems, uninsured liability |
| General liability | No state mandate | Required by most leases, clients, and general contractors | Lost contracts, blocked from a job site |
| Professional liability (errors and omissions) | No state mandate | Consultants, tech, design, and accounting firms, often by contract | Uncovered claims, lost contracts |
| Commercial property or a package policy | No state mandate | Anyone with a space, inventory, or equipment; landlords often require it | Out-of-pocket losses, lease default |
What business insurance costs in Michigan
These are illustrative annual ranges for small Michigan businesses, not quotes. Your real price depends on payroll, revenue, claims history, and the exact kind of work. Michigan prices workers' comp off advisory pure premiums published by the state's own rating organization, CAOM, and as of mid-2026 those have been trending down, with an average 3.3 percent decrease in the voluntary market taking effect January 1, 2026.
| Business type | Workers' comp (est.) | General liability (est.) | Package policy (est.) |
|---|---|---|---|
| Office or professional services | 600 to 2,400 dollars | 500 to 1,900 dollars | 1,100 to 3,600 dollars |
| Restaurant or cafe | 2,500 to 10,000 dollars | 1,400 to 5,000 dollars | 4,000 to 14,000 dollars |
| Landscaper or small contractor | 3,500 to 14,000 dollars | 1,100 to 4,000 dollars | Usually separate policies |
| Light manufacturing shop | 2,500 to 9,000 dollars | 1,000 to 4,000 dollars | 3,500 to 12,000 dollars |
| Retail store | 1,200 to 5,000 dollars | 800 to 3,000 dollars | 2,200 to 8,000 dollars |
The 14 workers comp questions Michigan owners ask
Workers' comp is where most of the confusion and most of the risk live, so we wrote a plain-English guide for every common situation. Start with the Michigan workers comp overview, then jump to the one that matches your business:
- I own an LLC
- I am a sole proprietor
- I own a corporation (C-corp or S-corp)
- We are a partnership
- We are a nonprofit
- My workers are 1099 contractors
- I only have part-time or seasonal staff
- I only employ family members
- My team is remote or out of state
- What happens if I do not have it
- How much it costs
- How to get it, even if I have been turned down
- What I need for a contractor license
A Grand Rapids example
Illustrative, not a quote. A four-person general contractor in Grand Rapids runs the business as an LLC with two manager-members and two field employees. Because two employees are on the crew along with the working owners, the business is past Michigan's 3-people-at-one-time trigger, so a policy is required and the two employees must be covered from their first day. The two manager-members are treated as employees too, but because they each own more than 10 percent of an LLC with fewer than 10 members, either could formally opt out on the state's exclusion form if they carry their own coverage elsewhere. When a builder they want to work for requires proof of coverage, the LLC already has a policy and can produce a certificate the same day. See the trade detail on our workers comp for contractors page.
Real questions Michigan owners ask
Do I need workers comp for my Michigan business?
It depends on your headcount and hours. Michigan requires coverage once a private employer has 3 or more people working at one time, or one person working 35 or more hours a week for 13 weeks or longer in the past year. Every public employer must carry it.
I just hired my first employee in Michigan. Do I need it right away?
Not always from one hire. One employee triggers coverage only once that person works 35 or more hours a week for 13 weeks or longer. But once you have 3 people working at one time, including part-timers, coverage is required immediately.
Do I have to cover myself as the owner?
It depends on your entity. A sole proprietor is never an employee and is not required to cover themselves. Working partners, corporate officers, and LLC manager-members are covered by default and can opt out only by filing a state exclusion form.
Is general liability insurance required in Michigan?
The state does not make general liability mandatory for most businesses, but landlords, clients, and general contractors almost always require it before they will sign with you, so in practice you usually need it.
What happens if I skip required workers comp?
Failing to carry required coverage is a misdemeanor punishable by a fine of up to 1,000 dollars, up to 6 months in jail, or both, and each day without coverage is a separate offense. You also lose the legal shield that keeps an injured worker from suing you.
Does Michigan have a state workers comp fund?
No. Michigan has no state fund. You buy from private carriers on the open market, and if no carrier will take you, the Michigan Workers' Compensation Placement Facility, the assigned-risk plan, is the guaranteed backstop.
I am based out of state with a worker in Michigan. Do I need coverage here?
Generally yes. With an employee working in Michigan you usually need Michigan coverage for them, no matter where your company is based. We can add Michigan to your policy or write a separate one.
Why Michigan owners choose Morrow
- We shop the right market for you. In Michigan you buy workers' comp on the open market from any private carrier licensed in the state, because Michigan has no state fund; if no carrier will take you, the Michigan Workers' Compensation Placement Facility (the assigned-risk plan) is the guaranteed fallback, so we can shop your rate freely and still keep a backstop for hard-to-place work.
- We catch pricing mistakes. Your price depends heavily on the category your work falls into for pricing (the class code). Put people in the wrong category and you overpay for years. We review your payroll and classifications before you buy.
- Proof of coverage, fast. Need a certificate (proof of coverage) for a general contractor or a landlord before Monday? We turn those around the same business day for most carriers.
- We help lower the score that drives your price. Insurers give you a score based on your past claims that raises or lowers your cost (the experience modification rate). We review it each year, flag errors, and connect you with return-to-work and safety resources that bring it down.
- Real people when a claim happens. When someone gets hurt, we stay involved through the life of the claim, not just at renewal.
Related Michigan guides
Every Michigan business is set up a little differently. These companion guides answer the same question for other situations, plus the national explainers behind the terms used here.
- Business insurance in Michigan (start here)
- Workers comp: the owner's overview
- I own an LLC: do I need workers comp?
- I'm a sole proprietor: do I need workers comp?
- I own a corporation (C-corp or S-corp): do I need it?
- We're a partnership: do we need workers comp?
- We're a nonprofit: do we need workers comp?
- My workers are 1099: do I still need it?
- Only part-time or seasonal staff: do I need it?
- I only employ family: do I need workers comp?
- Remote or out-of-state staff: do I need coverage?
- What happens if I don't carry workers comp?
- How much does workers comp cost?
- How do I get workers comp (even if turned down)?
- What insurance do I need for a contractor license?
- Workers compensation insurance, explained
- What workers comp costs (national guide)
- Hiring your first employee: what changes
- What workers comp does not cover
- Michigan general contractor workers comp
This guide is general information, not legal advice. Michigan rules and penalty amounts can change, so verify current requirements with the Michigan Workers' Disability Compensation Agency (WDCA) or a licensed advisor before you rely on them. Last updated: July 2026.