Umbrella Insurance For Contractors In Michigan: Why It’s Essential

When you’re running a construction or contracting business in Michigan, your primary insurance policies—like general liability, commercial auto, and workers’ compensation—are designed to protect you against common risks.

But what happens if a claim goes beyond those primary policy limits? That’s where umbrella liability insurance comes in.

What Is Umbrella Insurance?

Umbrella liability insurance provides an extra layer of coverage above the limits of your main policies. If a large claim exceeds your general liability, commercial auto, or workers’ comp limits, the umbrella policy steps in to cover the difference.

One of the most attractive features of umbrella coverage is that it’s often more affordable to add than increasing the limits on each individual policy. This means you can get millions of dollars in extra protection for a relatively low cost.

Why Contractors Need Umbrella Insurance in Michigan

Contractors face unique risks that make umbrella coverage especially valuable:

Multi-vehicle accidents: If one of your work trucks is involved in a crash with multiple injuries and property damage, costs could quickly exceed your commercial auto limits.
Job site accidents: Construction sites come with high risks. Severe injuries, multiple claimants, or property damage can easily push a claim into seven figures.
Contract requirements: Many larger projects—especially municipal jobs or subcontracting for big general contractors—require contractors to carry umbrella insurance with limits of $5 million or even $10 million. Without it, you may not qualify to bid.

Additional Benefits of Umbrella Coverage

Beyond higher liability limits, umbrella insurance also covers legal defense costs, even if a claim is groundless. In today’s litigious environment, lawsuits can generate massive attorney fees that add up quickly.

By having umbrella insurance in place, you’re not only protecting your financial stability but also ensuring your business reputation and client trust remain intact after a claim.

How Much Coverage Do You Need?

For smaller contractors, a $1 million to $2 million umbrella policy is often enough to add peace of mind. But for those working on larger or higher-risk projects, $5 million to $10 million policies are becoming standard.

The right amount depends on:

The size of your projects
The requirements of contracts you bid on
The type of work your crews perform

Final Thoughts

Umbrella insurance isn’t just about protecting your balance sheet—it’s about staying competitive. Many Michigan contractors are already carrying this coverage because it’s required by the jobs they pursue.

At the end of the day, not having enough coverage in a major claim scenario could put your entire business at risk. For a relatively low cost, umbrella insurance offers big protection and peace of mind.

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