Workers Comp Insurance For Contractors In Michigan - Everything You Need To Know

Workers Comp Insurance For Contractors In Michigan - Everything You Need To Know

When you’re running a contracting business in Michigan, protecting your employees is one of the most important responsibilities you have. That’s where workers compensation insurance comes in. This coverage helps pay for medical expenses, lost wages, and rehabilitation services if an employee gets injured or sick due to their work.

For contractors—where job sites often involve heavy equipment, ladders, and physical labor—workers comp isn’t just a legal requirement. It’s a safety net for your employees and financial protection for your business.

What Does Workers Comp Cover?

Workers compensation provides coverage for:

• Medical expenses related to workplace injuries or illnesses
• Lost wages while the employee recovers
• Rehabilitation services if ongoing care or therapy is needed
• Employers liability protection, which helps cover lawsuits if an employee claims negligence

How Is the Cost Determined?

Workers compensation premiums for contractors in Michigan are based on several key factors:

• Payroll – Your total payroll is the starting point for calculating premiums.
• Class codes – Each job role is assigned a classification code based on risk. A roofer’s class code, for example, is higher risk (and more expensive) than an office administrator.
• Claims history – Businesses with more past claims may pay higher rates.
• Experience modification factor (e-mod) – This compares your claims to others in your industry. A good safety record can lower your premiums, while frequent claims can raise them.

The Audit Process

At the end of the policy term, insurance carriers perform an audit to confirm payroll and job classifications. If your numbers were underestimated, you may owe more. If they were overstated, you may get a refund.

Keeping accurate payroll records and assigning the correct class codes is essential to avoid costly surprises.

Coverage Limits in Michigan

By law, Michigan requires minimum workers comp limits of:

• $100,000 per accident
• $500,000 policy limit
• $100,000 per employee

For contractors, those limits are often too low. A single serious accident can exceed them.

That’s why many insurance professionals recommend at least $1 million coverage limits across the board. The difference in premium is often minimal, but the protection is far greater.

Why Employers Liability Coverage Matters

In addition to medical and wage benefits, most policies include employers liability coverage. This protects your business if an employee sues, claiming their injury was due to negligence or unsafe conditions.

Final Thoughts

Whether you’re a small contractor hiring your first employee or an established operation managing multiple crews, having the right workers compensation insurance in Michigan is essential. It protects your employees, shields your business from major financial losses, and ensures you’re compliant with state law.

If you’re looking for guidance on getting the best policy at a fair price, working with an insurance professional who understands the contractor industry can make all the difference.