Contractor Insurance Requirements in Michigan

Michigan licenses residential builders and maintenance and alteration contractors for covered residential work, but LARA does not publish one universal GL minimum for every residential-builder license. Many local permit offices and owners nevertheless require a COI, commonly $300,000 to $1,000,000 per occurrence. The citation trail is MCL §§ 339.2404, 339.2412. Treat the quoted number, when one exists, as a licensing floor rather than a safe project limit. A homeowner should request a current Certificate of Insurance showing the exact legal name, policy number, effective dates, occurrence and aggregate limits, products/completed operations, and any additional-insured wording required by the contract or permit office. Where Michigan does not publish a statewide GL minimum, ProFix describes market ranges only as verification guidance, not as law. Roof, structural, excavation, mold, fire, solar and multi-trade projects should usually be reviewed for umbrella or excess liability because standard GL can contain residential, roofing, pollution, subsidence or subcontractor exclusions.

Michigan workers' compensation applies when an employer has one employee working at least 35 hours per week for 13 weeks, or three or more employees at one time. Construction staffing can satisfy these triggers quickly, and sole proprietors should document exemption status. Cite MCL §§ 418.115, 418.611. Coverage is written through private carriers, the assigned-risk plan or approved self-insurance. The policy should name Michigan and the same entity that holds the LARA license. For residential hiring, the key question is not only whether the contractor has a policy, but whether the people entering the home are covered by that policy. Ask whether subcontractors are employees, independent businesses with their own WC, or excluded owners. If the contractor says it is exempt, request the state exemption form or written statutory basis and keep it with the contract file. A GL policy does not pay statutory wage-loss and medical benefits for an injured worker, and an occupational accident policy is not always a substitute for workers' compensation.

Michigan does not require a universal residential-builder license bond. Bonds appear in local registrations, public work, manufactured housing, right-of-way work and specific owner contracts. A bond should be read as financial security, not as liability coverage. The legal anchor is MCL §§ 129.201, 339.2404. A license bond is not the same thing as liability insurance: it is a surety promise that may reimburse a claimant only after a covered violation, and the surety normally seeks reimbursement from the contractor. It also is not always a performance bond guaranteeing completion of one homeowner's project. For residential work, ask who the obligee is, the bond amount, the effective dates, cancellation notice, and whether the bond is tied to the state license, a city registration, a right-of-way permit or a specific contract. For public or large commercial work, separate bid, performance and payment bonds can be required even when no residential license bond exists.

Residential Builder and Maintenance and Alteration licenses cover residential structures, with LARA noting that work totaling $600 or more generally requires licensing. Commercial construction uses local permits and separate trade licensing rather than the residential-builder credential. For insurance review, residential work should be tested against the homeowner contract, permit office, lender, HOA or condo requirements, and the license classification. Commercial work usually scales faster because leases, architects, public owners and general contractors often require additional insured status, waiver of subrogation, primary-and-noncontributory wording, higher auto limits and umbrella coverage. A contractor who is legal for a small repair may still be underinsured for a structural addition, roof replacement, fire restoration or job involving subcontractors.

Electrical, plumbing and mechanical/HVAC contractors are regulated separately by LARA divisions. A Maintenance and Alteration license is trade-limited. Lead abatement, asbestos abatement and mold remediation after water losses need separate clearance, endorsements and safety controls. Federal overlays still matter in every state: renovation of pre-1978 painted surfaces can require EPA Renovation, Repair and Painting compliance under 40 C.F.R. Part 745, and asbestos disturbance can trigger OSHA construction asbestos rules at 29 C.F.R. § 1926.1101 plus state notification or licensing. Specialty insurance should match the hazard. Ask about professional liability for design-build advice, pollution or microbial coverage for mold and sewage, rigging/crane coverage for HVAC rooftop units, and hot-work controls for welding or torch-down roofing. A general liability COI with a low premium can be misleading if the trade that caused the loss is excluded.

Use LARA's license search for residential builder, M&A and trade credentials. Ask for GL, WC and completed-operations proof before a deposit. The Michigan Department of Insurance and Financial Services can confirm insurer and agency licensing. Use three documents together: the state or local license record, the COI, and the bond or workers' compensation proof. The license board URL for Michigan is https://www.michigan.gov/lara/bureau-list/bcc, and the insurance regulator URL is https://www.michigan.gov/difs. Match the business name, DBA, address and license number across all documents; mismatches are the fastest way to spot borrowed insurance or an unlicensed subcontractor. Call the producer listed on the COI, not a phone number supplied only in a text message. For larger residential jobs, require updated certificates before each draw and before final payment. This is an insurance-compliance checklist, not legal advice, and the local permit office can impose stricter conditions than the statewide baseline.