Business Insurance in Michigan

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Nearly two in three business owners in the Great Lakes State, say Michigan has a positive business environment for small businesses. The number of small businesses in this state reflects this state's promising economic landscape.

According to the US Small Business Administration Office of Advocacy, in 2021, 902,131 small businesses called Michigan their home. These businesses make up 99.6% of all Michigan’s businesses and employ over 1.9 million employees. Running a small business is no easy task. That is why business insurance is so essential.

The state of Michigan requires businesses to purchase worker's compensation insurance if a business has three or more employees or have one full-time employee working more than 35 hours a week for a period of at least 13 weeks. The coverage in this policy provides employees with medical care after a work-related injury. Workers’ Compensation benefits include:

  • Pay for medical care
  • Cover diagnostics and testing
  • Pay for prescriptions needed
  • Replacement services, if needed
  • Replace a percentage wage loss

Workers' compensation insurance includes Employers’ Liability coverage which can aid business owners by covering legal costs associated with an employee or their family filing a liability lawsuit against them.

Business-owned vehicles, as well as personally owned vehicles, are required to carry minimum limits of $50,000 bodily injury liability per person, $100,000 bodily injury per accident, and $10,000 for property damage liability.  If a business owns vehicles, meaning the auto is titled and registered to the business, then commercial auto insurance is needed. This policy covers costs related to injuries resulting from accidents involving work vehicles. Besides the statutory liability limits previously mentioned, Michigan also requires Personal Injury Protection (PIP) coverage that pays for injuries for driver and passengers in your vehicle and PPI, Property Protection Insurance of $1,000,000 that pays for damage to real property or parked cars damaged by your automobile. Trucking companies may need to meet additional insurance regulations.

Though it's not required, if your business ever rents a vehicle or has its employees use their personal automobiles for the business, it is recommended that your business carry Employers’ non-owned and hired auto liability (HNOA) insurance. This coverage would be excess over auto insurance carried by an employee or purchased from a rental care company. It would respond in the event of an accident exceeding the employee’s auto or car rental insurance in place. This coverage can be added to a business auto policy and, occasionally, to the general liability coverage.

Some of the industries that will require Business Insurance in Michigan are:

  • Architecture & Engineering
  • Offices
  • Construction and contractors
  • Consulting firms
  • Medical industry
  • Manufacturing
  • Professional services
  • Retail
  • Wholesale

Types of Commercial Business Insurance Offered in Michigan

Small businesses in Michigan tend to purchase this type of insurance.

General Liability Insurance

Business liability insurance is a necessity for all Michigan companies. It covers common risks, including injuries and property damage to third-parties. Many commercial lease contracts will also mandate the acquisition of this coverage. Coverage includes:

  • Third-party bodily injury
  • Third-party property damage
  • Product and premises liability
  • Good will medical payment
  • Personal and advertising injury
  • Fire legal liability

General liability insurance is an essential component of business risk management for small companies and is reasonably priced. The median average premium for a very small business is about $42 per month.

Workers’ Compensation Insurance

Each Michigan Company with at least one full-time or part-time staff member must fulfill the requirements of workers' compensation. Additionally, it protects sole proprietors from work-related injury expenses that health insurance may not cover. It is best for:

  • Employee medical expenses
  • Disability benefits
  • Legal costs from employee injuries

Workers' compensation insurance pays for the vast majority of medical bills incurred because of injuries sustained in the workplace. Medical costs are significant, so these costs often skyrocket.

The laws regarding businesses regulating worker's compensation vary from state to state. Typically, companies need to have a plan in place as soon as they hire their first employee or a certain quantity of workers.

This policy can be incorporated even when it's not required by law. It protects an employer against medical costs and employee lawsuits related to workplace injuries, such as a fall at work, an accident with equipment or machinery, or an occupational disease.

If you or one of your employees needs medical attention or time off due to work, you can rely on workers' comp. If a dissatisfied, injured employee files a lawsuit against your company, you may be able to rely on workers' comp. Without workers comp insurance, your business will be responsible for an injured employee's medical costs and attorney fees. And most states impose strict penalties for non-payment.

Commercial Auto Insurance

Auto insurance is required for all vehicles in Michigan, whether owned individually or by a company.  Commercial Auto insurance covers liability from at-fault accidents as well as physical damage coverage for your vehicles that get damaged in an accident or are stolen, vandalized, or flooded.   

New Hampshire and Virginia are the only states where auto insurance is not mandatory. Nonetheless, drivers are still liable for damages they are responsible for.

Business owner’s policy

A BOP combines commercial property insurance and liability insurance for small, low-risk companies in Michigan. It enables these businesses to save money on insurance because it costs less than buying two separate policies.

If you own or lease a workspace, and your business has assets, a business owners' policy (BOP) is a good choice. General Liability and Property coverage are the principal kinds of insurance needed by most local businesses.

A BOP is a good choice for small businesses that work directly with the public and have valuable commercial property. Obtaining liability insurance enables small firms to avoid costly payouts for injuries and property damage that they cause to others.

Professional liability insurance

Professional liability insurance also referred to as errors and omissions (E&O), safeguards businesses from liability caused by the performance of their professional services or giving expert advice in the state of Michigan. It covers lawsuits filed related to professional performance for:

  • Work mistakes and oversights
  • Professional negligence lawsuits
  • Inaccurate or incomplete work

No matter how experienced and thorough the professional service provider is, mistakes are bound to occur. Your clients may not be understanding if your error results in their financial loss, and they end up experiencing a good deal of stress. Professional liability insurance provides your company with a defense against professional liability negligence lawsuits from clients.  A deductible may apply, and your insurance provider will cover defense expenses and settlement up to your policy limit.

Cyber insurance

This plan covers financial losses incurred from dealing with the fallout from data breaches and cyberattacks. It is recommended for Michigan companies that handle credit card numbers and other sensitive information. It can be customized to include coverage for:

  • Customer notification expenses
  • Fraud monitoring services
  • Data breach investigation
  • Hardware damage
  • Loss of income
  • Ransome
  • Computer transfer fraud

Cyberattacks and data breaches are intended to steal large amounts of data and/or money and are becoming increasingly common. Small businesses often have weak cybersecurity, making them desirable targets.

A cyber-attack is more than just a nuisance - it can be debilitating, putting your company out of business. In fact, one-third of small businesses go out of business within six months of a cyberattack. Cyber insurance assists your business in recouping its financial losses caused by cyber threats and data breaches. It covers costs for credit monitoring, attorney fees, court fines, and settlements.

Commercial umbrella insurance

Umbrella insurance boosts your general liability, commercial auto, and employers’ liability policy limits.  Once the underlying policy exhausts its limit, an Umbrella policy steps in to pay the remaining amount owed on a covered claim.  An Umbrella will pay excess damages for:

  • Third-party bodily liability injury lawsuits
  • Auto accident liability lawsuits
  • Employee injury liability lawsuits

Business proprietors who purchase commercial umbrella insurance frequently have a business contract that calls for greater coverage limits than they carry on their underlying primary policies.

Commercial property insurance

This policy provides coverage for business owned physical structures and contents, extending to inventory, equipment, and furniture. Include it with general liability coverage in a Business Owner's Policy for savings. It covers property for damage caused by various perils:

  • Fire
  • Theft and vandalism
  • Windstorm (Hurricane & Tornado)
  • Hail
  • Aircraft
  • Riot or civil commotion
  • Vehicles
  • Other perils not excluded

Commercial property insurance indemnifies businesses against loss or damages to their business property due to a fire, burst pipe, or other calamities. Commercial property insurance is recommended for most business operators, even if it's not required. Regardless of what's being covered, this insurance guarantees that expensive equipment, as well as inventory, is adequately covered.

Michigan Small Business Insurance Requirements

Some state laws impact which business insurance a company must have. These laws exist in every Michigan City, from Detroit to Grand Rapids. According to state law, every small business in Michigan is required to have the following business insurance:

Workers' compensation insurance

Michigan state law states that all private employers with at least one full-time or three part-time employees must carry workers’ compensation coverage. Public employers are also required to have this coverage.

Workers' compensation insurance covers hospitalizations and medical treatment, as well as disability and funeral costs for workers who have been injured while working.

Commercial auto insurance

All vehicles owned by businesses in Michigan should be covered by auto insurance. A commercial auto policy covers the same things as an individual auto policy but with the business use of vehicles insured.  The cost resulting from at-fault auto accidents for bodily injury and property damage liability can be great.

Michigan requires both bodily injury and property damage liability as well as personal injury protection (PIP) and PPI, Property Protection Insurance that pays for damage to real property or parked cars damaged by your automobile:

  • $50,000 bodily injury liability per person
  • $100,000 bodily injury liability per accident
  • $10,000 for property damage in another state
  • $250,000 personal injury protection (or less for individuals enrolled in Medicare or Medicaid)
  • $1,000,000 Property Protection Insurance

Trucking businesses may need additional compliance to cover regulations.

Cost of Business Insurance in Michigan

Not all businesses in Michigan are equal. Each business has different exposures to losses and has unique insurance coverage needs. As a result, the cost of commercial insurance in Michigan fluctuates anywhere from $300 to $100,000 a year or more.

Some of the factors that influence your business insurance cost include:

  • Industry
  • Annual revenue
  • Years of experience
  • Payroll
  • Policy provisions, such as coverage limits and deductibles.
  • Claims history
  • Type of coverage
  • Location

Get a Quote for Business Insurance in Michigan

If you need to get a quote for your Michigan business, please visit us at InsuranceAdvisor.com. Choose your state, then choose from General Liability, Commercial Property, Business Auto, and Workers’ Compensation insurance and answer the application questions.  Once we receive your request, we will provide you with a quote as quickly as possible.   

Why Choose Insurance Advisor for Commercial Insurance in Michigan?

We are licensed to provide insurance in Michigan and can provide your business with quotes from different insurance carriers. You can request quotes for your business from the comfort of your home, office, or anywhere by visiting us at InsuranceAdvisor.com. Once you create an account, your business information is stored. You may come back at any time to request quotes for other lines of insurance, get a certificate of insurance, renew your policies, and update your information.  

Frequently Asked Questions (FAQ) about Michigan Insurance

1. How much is business insurance in Michigan?

Commercial insurance can be affordable for small businesses, but it truly depends on many variables. In the state of Michigan, the median costs of insurance for very small businesses are: General liability: $42 per month Workers' comp: $44 per month Professional liability/E&O: $59 per month

Factors that affect a business’s premium, are:

  • Industry
  • Annual revenue
  • Years of experience
  • Payroll
  • Policy provisions, such as coverage limits and deductibles.
  • Claims history
  • Type of coverage
  • Location

2. Where can I get inexpensive business insurance in Michigan?

The old saying, “You get what you pay for,” is true with all types of insurance. If you want more types of losses to be covered, you will pay more for insurance to cover those loss types. The cheapest insurance is never the best insurance.

Get a quote from more than one insurance company, you could get them from one agent or different agents. This allows you to compare one insurance company’s rates to another’s. Because some insurance companies may have better success in an industry, that carrier’s premium could be much less.

Always read the policy exclusions. When getting an insurance quote, you can ask for a list of these if they do not show on your quote. This is where you find what is NOT covered. Get an affordable option with the most common mishaps likely to happen to your business, insured and not listed under exclusions.

3. What types of business insurance are required for businesses in Michigan?

The following business insurance policies are recommended for the state of Michigan:

  • General Liability Insurance
  • Workers Compensation Insurance
  • Commercial Auto Insurance
  • Commercial Property Insurance
  • Professional liability insurance
  • Cyber insurance
  • Commercial flood insurance
  • Cyber insurance
  • Commercial umbrella insurance

4. Which insurance companies are best in Michigan?

Our Michigan licensed insurance agent will determine the best insurance company for your business.  Insurance companies often specialize in specific business industries, which can vary from state to state. An independent insurance agent representing a multitude of carriers, matches your business with carriers that know your industry and will fulfill your company's insurance needs. Visit us at InsuranceAdvisor.com to request a quote.

5. How to find out if a business has liability insurance in Michigan?

Request a certificate of liability insurance from your vendor or any company you intend to work with, which will provide the policy number, the insurance company providing the coverage, and the limits of insurance on the liability policies carried.

If in doubt, call the insurance agency listed on the certificate and request confirmation of the insurance's validity.

6. What is the cost of essential business liability insurance in Michigan?

As discussed above in this article, the cost of essential business insurance varies greatly between companies. Each business has unique challenges and needs unique insurance coverage. This translates to the price for insurance in Michigan and anywhere from $300 to any number. Put it this way, do you think a dog walker pays anywhere near the same premium as a manufacturer of food products? No, of course not. Request an insurance quote for your business at InsuranceAdvisor.com.

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