Business Insurance for Contractors in Michigan

Michigan contractors — from residential remodelers to commercial builders to specialty trades — face some of the most complex insurance needs of any small business. Here's what every Michigan contractor should have in place.

Coverages Every Michigan Contractor Needs

1. General Liability (GL)

The foundation. Covers third-party bodily injury and property damage from your work.

• Typical limits: $1M per occurrence / $2M aggregate
• Often required by clients: minimum $1M, sometimes $2M+
• Cost: $1,500-$5,000/year depending on trade and revenue

2. Workers' Compensation

Required by Michigan law. Construction has high rates due to injury frequency.

3. Commercial Auto

If you have work vehicles. Personal auto excludes business use.

4. Tools and Equipment (Inland Marine)

Covers tools and equipment at job sites, in transit, or stored. Critical — tools are stolen from sites and trucks regularly.

• Typical coverage: $5K-$50K depending on tool value
• Cost: $200-$800/year

5. Builders Risk Insurance

Covers buildings under construction. Often required by clients for major projects.

• Project-specific or annual blanket policies available
• Cost: 1-4% of project value

6. Hired and Non-Owned Auto

Covers vehicles you rent or employees driving personal vehicles for work.

7. Commercial Umbrella

Additional liability above your GL/auto. Most commercial clients require $2M-$5M total liability.

Coverages Many Contractors Should Add

Pollution Liability

For trades dealing with hazardous materials — asbestos, lead, mold remediation, fuel/oil tank work, painting.

Professional Liability (E&O)

For design-build firms, architects, engineers. Covers errors in design or specifications.

Surety Bonds

License bonds required by Michigan, plus performance/payment bonds required by larger projects.

Cyber Liability

If you handle customer payment info or have computer systems with client data.

Michigan-Specific Considerations

Michigan Residential Builder License

Required for residential work over $600. License bond required (separate from insurance).

Subcontractor Verification

Always require certificates of insurance from subs. Without them, your policy may cover their work — and your premium gets retroactively recalculated.

Additional Insured Endorsements

Most commercial clients and many GCs require you to add them as "additional insured" on your GL. Verify this is included in your policy.

Waiver of Subrogation

Many contracts require this — your insurance gives up the right to come after the other party. Make sure your policy includes blanket waiver.

Average Michigan Contractor Insurance Costs

Handyman / Small Renovation

• GL: $800-$1,500/year
• Tools: $300-$500/year
• Workers comp: based on payroll if you have employees

General Contractor

• GL: $2,500-$5,000/year
• Workers comp: significant if employees
• Bonding capacity setup

Roofing Contractor

• GL: $3,500-$7,000/year
• Workers comp: very high (highest-rate trade)
• Tools: $500-$2,000/year

HVAC / Plumbing / Electrical

• GL: $1,500-$3,500/year
• Tools/equipment: $500-$1,500/year
• Workers comp: moderate to high

How to Save on Contractor Insurance

1. Maintain claim-free record
2. Safety programs and training documentation
3. Bundle coverages with one carrier
4. Higher deductibles
5. Accurate revenue and payroll reporting
6. Sub verification — always collect COIs
7. Use the right class codes — misclassification inflates premiums

Get a Michigan Contractor Quote

Knight Family Agency writes contractor insurance across West Michigan trades. Tell us about your business — trade, revenue, payroll, vehicles, typical project type — and we'll build a complete coverage package. Fill out our quote form to start.