Workers Compensation Insurance For Manufacturing Companies - Everything You Need To Know

Workers Compensation Insurance For Manufacturing Companies - Everything You Need To Know

When you run a manufacturing company, workplace safety is always a top priority—but even with strong safety programs in place, accidents can still happen. That’s where workers compensation insurance comes in.

Workers compensation insurance covers medical expenses, lost wages, and rehabilitation services for employees who are injured or become ill due to their job. It’s not just protection for your employees—it’s protection for your business. By carrying proper coverage, you make sure your team is cared for while also protecting your company from costly claims and lawsuits.

Is Workers Compensation Insurance Required for Manufacturing Companies in Michigan?

Yes. In Michigan, nearly every business with employees is required by law to carry workers compensation insurance. Manufacturing is especially high-risk compared to many other industries, so compliance is non-negotiable. Without coverage, you could face heavy penalties, lawsuits, and financial exposure if an employee gets hurt.

How Much Does Workers Compensation Insurance Cost for Manufacturers?

The cost of workers comp varies based on several key factors:

• Payroll Size – The larger your payroll, the higher your premiums, since cost is calculated as a percentage of wages.
• Class Codes – Each type of job has a code assigned by insurance carriers. High-risk roles like machine operators or welders cost more than office staff.
• Claims History & Experience Mod – If you’ve had frequent or severe claims, your “mod” factor increases, raising your premium. Strong safety programs can help lower it over time.
• Audits – Workers comp policies are audited. Misclassifying employees or underreporting payroll can result in expensive corrections.

Why Coverage Limits Matter

Michigan requires minimum coverage limits of $100,000 per accident, $500,000 per policy, and $100,000 per employee. But in today’s environment, those minimums often aren’t enough—especially for serious workplace injuries.

Many manufacturing companies choose $1 million coverage limits across the board. Surprisingly, higher limits usually aren’t that much more expensive, but they provide significantly stronger protection.

Common Mistakes Manufacturing Businesses Make

Even established manufacturing companies run into avoidable issues with workers comp, such as:

• Selecting state minimum coverage limits that may not be adequate.
• Not reporting injuries quickly, leading to higher costs and delayed claims.
• Failing to update class codes when job duties change.
• Neglecting workplace safety programs, which drives up claims and premiums.

Employers Liability Coverage

Most workers compensation policies include employers liability coverage, which protects your business if an injured employee sues. This is a crucial safeguard for manufacturers where workplace injuries can be severe and costly.

Final Thoughts

For Michigan manufacturing companies, workers compensation insurance is more than just a legal requirement—it’s an investment in your people and your company’s long-term success. By carrying the right limits, properly classifying employees, and prioritizing workplace safety, you can both protect your employees and manage costs effectively.