Business Insurance Requirements for General Contractors in Michigan

Michigan’s construction market is primed for growth. Between its shortage of skilled workers and its influx of construction jobs in Metro Detroit, Michigan offers plenty of opportunities for licensed general contractors. Whether you specialize in remodeling homes in Ann Arbor or building commercial real estate in Grand Rapids, you often need contractor’s insurance to comply with Michigan laws and to protect your business.

Michigan requires you to purchase workers' compensation insurance if you have three or more employees, or if you employ one or more workers for 35 hours a week for 13 or more weeks. Unlike many states, Michigan doesn’t require all contractors in the state to hold a license bond to be licensed. That said, bonding requirements vary. Some municipalities, like Oakland, may require you to have a bond if you work on public projects.

Your clients may also request proof of general liability insurance and professional liability insurance before they hire you. If you have business-owned vehicles, you need commercial auto insurance to cover them.

Insureon makes shopping for insurance easy with industry-leading technology that gathers quotes from top U.S. carriers that fit your needs. Read more to find out which policies are most common for general contractors in Michigan, and start an application to get your free quotes today.

Finding the right insurance policy for your general contracting business

The most common policies for Michigan general contractors depend on a variety of factors, including revenue, client contracts, and partnerships. The table below illustrates which policies might work best for your business structure.

 

Business type General liability / BOP Bond Workers' comp
Sole proprietor X X X
Partner X X X
Contractor / freelancer X X  
Employer X X X

 

General liability insurance: General liability insurance is the foundation of a general contractor’s protection. This coverage can address bodily injury, client property damage, product liability, and the cost of legal defense.

Professional liability insurance: Many clients require proof of professional liability insurance before entering contracts for professional services. This policy, also called errors and omissions insurance, can help cover legal expenses if you’re sued over contract disputes.

Business owner's policy (BOP): General contractors sometimes qualify for a business owner’s policy. This package helps your business save money by bundling commercial property insurance with general liability at an affordable rate.

Inland marine insurance: While property insurance can cover equipment that stays at your primary business location, inland marine insurance can cover items you use in the field, such as tools and any other equipment you use on the job. These move from location to location, which subjects them to more opportunities for loss, damage, and theft. That’s why they require special coverage.

Commercial auto insurance: Commercial auto insurance can cover vehicles your business owns or uses for business purposes. If your vehicle is involved in an accident, this policy can cover your liability for the other person's bodily injuries and property damage. It can also pay to repair your car when it is damaged by theft, weather events, or vandalism.

License/permit bond: General contractors often need a license or permit bond before they can start construction projects. This bond offers project stakeholders a guarantee that you will perform your work and adhere to state or town regulations. If you fail to uphold that agreement, the insurance company reimburses the stakeholders for their losses. Unlike a typical insurance policy, you are obligated to pay the insurer back. Michigan general contractors often need bonds to work on public projects.

Builder’s risk insurance: Builder's risk insurance addresses unique property exposures that property insurance can’t cover. Primarily, it protects structures in progress from damage caused by fire, vandalization, and non-severe weather events. It can also cover building materials and equipment that must stay on site.

Michigan workers' compensation insurance: Michigan state law requires all employers with three or more employees to carry workers’ compensation. If you have one or more employees who work for 35 or more hours per week for 13 or more weeks, you must also carry workers' comp coverage. If an employee is injured on the job, this policy can help pay for medical fees and lost wages.

Accidents are all too common on construction worksites. Even general contractors, who may not face the same risks as their workers, can get injured on the job. According to the Bureau of Labor Statistics, general contractors most often experience overexertion; slips, trips, and falls; and contact with objects or equipment.

Most Common Workplace Injuries: General Contractors in the U.S.

Business insurance costs for general contractors in Michigan

Insurance costs for Michigan general contractors are slightly higher than the national median, according to an analysis of Insureon applications.

While general contractors in Michigan may save on their general liability coverage ($1,200 versus the national median of $1,342) and workers’ comp coverage, they typically pay considerably more for their commercial auto and inland marine insurance than the national median. Commercial auto costs general contractors about $5,121 (or $427 per month) and inland marine insurance costs $1,040 (or $87 per month). To save money on your insurance, ask your agent about bundling policies.

Median Insurance Costs for Michigan General Contractors

Save time and money with Insureon

Insureon’s industry-leading technology helps general contractors in Michigan save time and money shopping for insurance by offering quotes from dozens of top U.S. carriers. Simply apply online and review quotes for the policies that fit your business needs. Our insurance specialists are licensed in Michigan and can answer your questions as you consider coverage.

To make the application go even quicker, have this information ready:

  • Workforce details, such as the number and types of employees.
  • Current and projected revenue.
  • Business partnerships.
  • Insurance history and prior claims.
  • Commercial lease insurance requirements.

Apply for free general contractor insurance quotes today.