Best Small Business Insurance in Michigan

Michigan Insurance Requirements

Michigan currently requires most businesses with part- or full-time employees to carry workers' compensation insurance. The state also requires businesses to cover all vehicles with commercial auto insurance. This includes personal vehicles that are used for business purposes.

Commercial Auto Insurance

Michigan require the following types of auto insurance coverage:

• Personal Injury Protection (PIP)
• Property Protection (PPI)
• Residual Bodily Injury and Property Damage Liability (BI/PD)

The State of Michigan website provides details about coverage requirements and options:

The PIP medical coverage options are:

• • Unlimited coverage
  • $500,000 per person per accident
  • $250,000 per person per accident
  • $250,000 per person per accident with exclusions
    • To select this option, one or both of the following must be met:
      • The named insured who is excluding PIP medical has qualified health coverage that is not Medicare; AND
      • Any resident relative or spouse who is excluding PIP medical has qualified health coverage
  • $50,000 per person per accident
    • To select this option, both of the following must be met:
      • The applicant or named insured is enrolled in Medicaid; AND
      • Any spouse and all resident relatives have qualified health coverage, are enrolled in Medicaid, or are covered under another auto policy with PIP medical coverage.
  • No PIP medical coverage
    • To select this option, both of the following must be met:
      • The applicant or named insured has coverage under both Medicare Parts A and B; AND
      • Any spouse and all resident relatives have qualified health coverage or are covered under another auto policy with PIP medical coverage.

PPI pays up to $1 million for damage your car does in Michigan to other people's property, such as buildings and fences. It will also pay for damage your car does to another person’s properly parked vehicle. It does not pay for any other damage to cars.

The default BI/PD coverage limits are:

• • Up to $250,000 for a person who is hurt or killed in an accident.
  • Up to $500,000 for each accident if several people are hurt or killed.
  • Up to $10,000 for property damage in another state.

You have the option of purchasing other BI/PD coverage limits under the new law. The lowest coverage limits you may purchase are:

• • $50,000 for a person who is hurt or killed in an accident.
  • $100,000 for each accident if several people are hurt or killed.
  • $10,000 for property damage in another state.

Workers’ Compensation Insurance

The Michigan Workers’ Compensation Agency details exactly which businesses are required to carry workers’ compensation insurance:

a) All private employers regularly employing 1 or more employees 35 hours or more per week for 13 weeks or longer during the preceding 52 weeks.
b) All private employers regularly employing 3 or more employees at one time. (This includes part-time employees).
c) Agricultural employers if they employ 3 or more employees 35 hours or more per week for 13 or more consecutive weeks.
d) Households employing domestic servants if they employ anyone 35 hours or more per week for 13 weeks or longer during the preceding 52 weeks.
e) All public employers

Data Breach Insurance

In December 2006, the Michigan legislature signed the Identity Theft Protection Act in law. The law, which took effect on July 2, 2007, provides that any residents of the state whose personal information has been compromised by a “security breach”, which it defines as “the unauthorized access and acquisition of data that compromises the security or confidentiality of personal information”, be notified of the breach. Here’s the relevant section of the Act:

Notice of security breach; requirements

“Unless the person or agency determines that the security breach has not or is not likely to cause substantial loss or injury to, or result in identity theft with respect to, 1 or more residents of this state, a person or agency that owns or licenses data that are included in a database that discovers a security breach, or receives notice of a security breach… shall provide a notice of the security breach to each resident of this state who meets 1 or more of the following:

(a) That resident's unencrypted and unredacted personal information was accessed and acquired by an unauthorized person.

(b) That resident's personal information was accessed and acquired in encrypted form by a person with unauthorized access to the encryption key.
MI Comp L § 445.72(12)(1) (2021)

A possible result of such disclosure is that Michigan residents whose personal information has been compromised may seek redress by suing the business whose systems were breached. But data breach insurance can protect a business that faces such a possibility. One class action suit is all it may take to destroy a business. 

Michigan Insurance Resources

Michigan Department of Insurance and Financial Services
Michigan Auto Insurance Information
Michigan Workers' Compensation Insurance Information
Michigan Home-Based Business Insurance

General Liability Insurance

The vast majority of Michigan companies purchase general liability insurance from an insurance company even though it is not legally required. This type of business liability insurance covers third-party bodily injury, third-party property damage, advertising liability, libel, slander, copyright issue, and other common claims faced by companies across various industries. 

General liability insurance is one of the most important types of business insurance your company can purchase.

Business Owner’s Policy

A business owner’s policy (BOP) is an affordable way to bundle business insurance coverages. This type of policy includes commercial general liability insurance with commercial business property insurance. Many small business owners with a physical business space opt for this coverage.

Commercial Auto Insurance

You need to carry commercial auto insurance if your company uses vehicles to transport people or goods. This type of insurance is very similar to personal auto insurance and covers liability, medical costs, collisions, and uninsured/underinsured motorists. A commercial auto policy also covers vehicles rented or owned by your company and employees who use their own vehicles for company business.

Workers’ Compensation Insurance

Michigan requires most businesses with at least one employee to carry workers’ compensation insurance. Nevertheless, it’s a good idea to subscribe to such insurance. Taking out workers' compensation insurance puts a limit on the amount and type of compensation that an injured employee may receive. The limits are set by law.

Employee Health/Life/Disability Insurance

Companies that provide health, life, and/or disability insurance as a fringe benefit will need appropriate Michigan insurance. Under the Affordable Care Act, firms with more than 50 full-time employees must offer health insurance or pay an expensive penalty.

Professional Liability Insurance

Professional liability insurance covers financial risks to attorneys, accountants, and other people who provide professional services or expertise. Professional liability coverage varies depending on the industry but usually includes negligence, legal defense, slander or libel, and copyright and trademark disputes. 

Professional liability insurance includes errors and omissions (E&O) insurance.

Data Breach Insurance

If your company hosts customers’ personal information on its servers and those servers are hacked, lawsuits and damages can result. Data breach insurance protects you in these cases. 

Cyber Liability Insurance

Similar to but more comprehensive than data breach insurance, cyber liability insurance may pay for legal expenses related to a data breach or set up a call center for individuals affected by a breach. It also may pay for active protection against cyberattacks.

Commercial Crime Insurance

Crimes like extortion, forgery, burglary, computer fraud, and embezzlement are covered by commercial crime insurance. Situations in which this type of insurance is particularly useful include dishonest or libelous acts by employees.

Fiduciary Liability Insurance

Fiduciaries, who are legally required to act in plan participants’ best interests rather than the company’s when choosing advisors and investments, should consider this type of insurance coverage. It covers them if they are sued for allegedly providing negligent investment advice or administering plans or benefits incorrectly. 

Third parties like out-of-company consultants and benefit plan administrators are usually not protected.

Directors and Officers Insurance

Any company with directors and officers should consider directors and officers (D&O) insurance coverage, a type of liability insurance that reimburses directors and officers for claims made against them regarding harm allegedly caused by their management decisions.

Executive Risk Coverage

Executive risk insurance is business liability insurance that provides coverage for fraud, D&O, employment practices, initial public offerings, pension funds, extortion, and professional negligence.