Michigan business insurance requirements come down to two things: what the state legally makes you carry, and what your clients make you carry to win the work. This guide lays out the Michigan business insurance requirements in plain English — commercial-auto minimums, contractor license and bond amounts, and which trades must insure to stay licensed. All figures are from Michigan sources, verified as of June 2026.
In This Michigan Guide:
What Insurance You Need to Operate in Michigan
Michigan legally requires workers compensation insurance once you have employees meeting the threshold, no-fault commercial auto insurance on any business vehicle, and a 25000 surety bond if you hold a residential builder license through LARA; general liability insurance is not mandated by state law for most businesses but is commonly required by contracts, landlords, and municipal permit offices.
Michigan Business Insurance Requirements at a Glance
Here are the exact Michigan business insurance requirements set by the state:
| Commercial auto minimum limits | 250/500/10 = 250000 bodily-injury-per-person / 500000-per-accident / 10000 property-damage (Michigan no-fault default minimums; drivers may elect reduced BI limits of 50000/100000 but the statutory default is 250/500) |
| Commercial / heavy vehicles | Michigan is a no-fault state so every policy must also include Personal Injury Protection (PIP) and Property Protection Insurance (PPI); for-hire motor carriers and commercial trucks over 10001 lbs must carry federal FMCSA minimums of 750000 or higher depending on cargo type; the 10000 property damage limit applies only to out-of-state accidents because Michigan no-fault PPI covers in-state property damage |
| State contractor license required? | YES for residential construction — Michigan requires a Residential Builder license or Maintenance and Alteration Contractor license through LARA (Licensing and Regulatory Affairs) for any person who undertakes residential building or improvement work; there is no state-level general contractor license for commercial construction — commercial contractor licensing is handled at the local or municipal level |
| Contractor surety bond | 25000 surety bond required for a Residential Builder license through LARA; security alarm contractors must post a separate 25000 bond under MCL 338.1059; local jurisdictions may require additional contractor bonds varying by municipality |
| Insurance to hold a license | LARA requires proof of general liability insurance with a minimum of 100000 per occurrence and workers compensation coverage (if employees meet the threshold) to obtain or renew a Residential Builder license; some municipalities require proof of insurance to pull building permits even if the state license does not |
| Other licensed trades | Security alarm contractors must carry a 25000 surety bond; cannabis businesses must carry product liability insurance with a minimum 100000 limit for bodily injury; healthcare professionals, auto dealers, and liquor licensees may have insurance requirements under their respective licensing boards — confirm with LARA for your specific trade |
Required by Law vs. Required by Clients in Michigan
The state sets the legal floor shown above. Your clients, landlords, and lenders usually require more, by contract: General liability insurance (commonly 1000000 per occurrence / 2000000 aggregate), additional insured endorsements, certificates of insurance (COIs), professional liability or errors and omissions coverage, commercial umbrella policies, and proof of workers compensation — these are not required by Michigan state law but are routinely required by commercial landlords, general contractors, lenders,
government contracts, and clients before you can work on their property or sign a lease
Registering your business: Registering your business entity (LLC, corporation, or partnership) with the Michigan Department of Licensing and Regulatory Affairs (LARA) is a separate legal step from obtaining insurance — forming the entity does not create insurance coverage and insurance does not substitute for proper business registration
Core Coverages Most Michigan Businesses Carry
Beyond what the law strictly requires, a few coverages show up again and again for Michigan businesses. General liability covers third-party injuries and property damage and is the policy clients ask for most. A business owner’s policy (BOP) bundles general liability with commercial property at a lower combined price. Professional liability (errors and omissions) covers advice-and-service businesses when a client claims a mistake cost them money.
Commercial auto covers vehicles used for work, which a personal auto policy will not. Workers’ compensation covers employees who get hurt on the job. Matching these to your trade is the practical side of the Michigan business insurance requirements.
Certificates of Insurance and Additional Insureds in Michigan
Most of the Michigan business insurance requirements you actually run into come from a contract, not a statute. A client, landlord, or general contractor will ask for a certificate of insurance (COI) before you start work, often demanding a specific dollar limit and asking to be named as an “additional insured” on your general liability policy.
There is usually no fee to add an additional insured, and a COI is free from your agent. Lining these up early keeps a paperwork request from delaying a job.
Other Michigan requirements: Michigan is a no-fault auto insurance state — every auto policy must include Personal Injury Protection (PIP) and Property Protection Insurance (PPI) in addition to liability, which is unique compared to most states; PIP coverage options range from an opt-out (if you have qualifying health coverage) up to unlimited lifetime medical benefits;
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Michigan workers compensation is administered by the Workers Disability Compensation Agency under the Department of Labor and Economic Opportunity (LEO) rather than DIFS; the maximum weekly workers comp benefit for 2026 is 1201 per week
Understanding Michigan Business Insurance Requirements
The Michigan business insurance requirements fall into two buckets: what the state legally makes you carry, and what your clients or landlords make you carry by contract. The table above lays out the Michigan business insurance requirements that come from the state itself — commercial-auto minimums, contractor bonds, and licensing rules.
Most Michigan business insurance requirements you actually run into day to day, like a certificate of insurance, come from a customer rather than the state. Knowing both sides of the Michigan business insurance requirements lets you buy exactly what you need to operate and win work, without overpaying for coverage no one is asking for.
Next step: Once you know what your business in Michigan actually needs, comparing quotes from several carriers takes only a few minutes. Many owners do this right after they understand their state and trade requirements.
Frequently Asked Questions
What business insurance is required in Michigan?
Michigan legally requires workers compensation insurance once you have employees meeting the threshold, no-fault commercial auto insurance on any business vehicle, and a 25000 surety bond if you hold a residential builder license through LARA; general liability insurance is not mandated by state law for most businesses but is commonly required by contracts, landlords, and municipal permit offices.
What are the commercial auto insurance minimums in Michigan?
Michigan’s minimum auto liability limits are 250/500/10 = 250000 bodily-injury-per-person / 500000-per-accident / 10000 property-damage (Michigan no-fault default minimums; drivers may elect reduced BI limits of 50000/100000 but the statutory default is 250/500).
Do I need general liability insurance to operate in Michigan?
General liability is rarely required by Michigan law for most businesses, but clients, landlords, and lenders often require it by contract, and licensed contractors may need it to keep a license. Many owners carry it either way.
Official Michigan Sources & Resources
- Michigan Michigan Department of Insurance and Financial Services (DIFS): https://www.michigan.gov/difs
- Michigan Licensing Board: https://www.michigan.gov/lara/bureau-list/bcc/sections/licensing-section/residential-builders
- Michigan DMV/DOT (commercial auto): https://www.michigan.gov/sos
- Insurance Information Institute: iii.org
- U.S. Small Business Administration: sba.gov
These Michigan business insurance requirements were last verified against official sources in June 2026. Requirements and minimums change — confirm the current figure with your state and a licensed agent.
More Michigan Business Insurance Guides
Disclaimer: This guide is informational only and is not insurance, legal, or tax advice. Business Insure Guide is an independent educational resource, not an insurance agency or carrier. Coverage needs, legal requirements, and prices vary by business, profession, and state and change over time. Always verify the exact requirement and price with a licensed insurance agent and your state before you buy.