Michigan General Liability Insurance Guide
If you own a small business in the Michigan , this information will help you understand Michigan Commercial
Liability insurance and protect your business and your personal assets from legal claims and settlements that
can spell financial ruin. Whether you work in Detroit, Lansing, Grand Rapids, Dearborn, Ann Arbor, Warren,
Flint or anywhere else in the Wolverine State having sufficient
general liability insurance
is an important part of any small business plan in Michigan.
Fast Facts About Michigan Small Business
A small business is defined as any company with fewer than 500 employees. Small business is vital to
Michigan’s economic well-being, accounting for over 98% of all state employers. Of Michigan’s 820,244
small businesses in 2008 (the latest data available), 179,525 were small employers, accounting for more
than 51% of the state’s private-sector jobs. Another 640,719 were one-person operations with no employees.
Source: SBA Michigan Small Business Profile 2011.
About Commercial Liability Insurance for MI Businesses
Commercial liability insurance (also called business liability insurance and commercial general
liability insurance) protects your Michigan business from financial loss resulting from claims of
injury or damage cause to others by you or your employees. A policy typically covers:
- Bodily Injury – physical damage to a person other than an employee at your place of business and
injuries caused by you or an employee at a client’s home or work place.
- Property Damage – damage caused by you or an employee to someone else’s property.
- Personal Injury – libel, slander, copyright infringement, invasion of property or privacy,
wrongful eviction, false arrest and similar acts that cause damage to a person’s reputation or rights.
- Advertising Injury – losses caused by your advertising
- Legal Defense and Judgments – costs to defend against real and frivolous suits and judgments up
to the limit of your coverage. Note this generally does not include punitive damages for negligence
or willful misconduct.
Michigan Minimum Business Insurance Requirements
Commercial Liability Insurance is not mandatory for businesses operating in Michigan. Michigan is a
modified comparative negligence no- fault state. The plaintiff who is 51% or more at fault cannot recover
damages. Non-economic damages for general personal injury are capped at $280,000. If a design defect
causes death or permanent loss of a major bodily function, awards are capped at $500,000. The statute of
limitations for personal injury is 3 years for negligent conduct and 2 years for intentional conduct.
Product liability statute of limitations are 3 years, unless a product was in use for more than 10 years,
in which case strict liability will not be the standard. Accidents and lawsuits (legitimate and frivolous)
do happen in Michigan. If you own property or other valuable assets you would be wise to invest in
sufficient commercial general liability coverage for your Michigan small businesses.
How Much Michigan Commercial Liability Insurance Should You Carry?
Each situation is unique, but as a general guideline, the type of Michigan business you operate or
products you manufacture should determine how much Michigan commercial general liability insurance you
need. A good rule of thumb for most small businesses is between $500,000 and $1 million. However, if
yours is a high-risk business such as the building trades or has a high volume of interaction with the
public such as a restaurant or retail business, you should consider increasing your coverage. Note that
if you operate out of your home, your homeowner’s or renter’s insurance has limited coverage for business
liability and loss.
How Are Premium Costs Assessed?
Michigan commercial liability insurance premiums are based on a number of factors including the types
of service or products you provide, the number of people you employ, how long you’ve been in business,
and your claims history. Coverage is typically capped at a specific dollar amount for your policy period.
Other Insurance to Consider for Your Michigan Small Business
Michigan requires that anyone who employs 3 or more persons, whether full or part time, carry
workers compensation insurance. Sole proprietors with no employees are not required to carry
workers compensation. Members of LLCs, LLPs, partners, corporate offices and independent
contractors are generally exempt. Other exemptions may apply. Contact the Michigan Department of
Licensing and Regulatory Affairs Workers’ Compensation Agency for details.
Michigan requires that all drivers carry minimum automobile insurance. If you use your car or
truck for business, it is recommended that you purchase a commercial vehicle policy.
Employee Disability Insurance
BOP – Business Owner’s Package
E&O – Errors & Omissions
EPLI – Employment Practices Liability Insurance
Commercial Property Insurance
Regulating Agency and References
Michigan Department of Licensing and Regulatory Affairs
This agency is responsible for regulating all insurance policies sold in the state, including commercial liability coverage.
||(517) 373- 1820
||P.O. Box 30004
Lansing, MI 48909
Michigan Small Business Administration
The SBA is an independent agency of the federal government created to aid, counsel, assist and protect the interests of small
business concerns and maintains District Offices in Detroit and Grand Rapids. Get the link to the Michigan SBA at
National Association of Insurance Commissioners (NAIC)
This is an organization of insurance regulators from the 50 states, District of Columbia and the five U.S. territories. NAIC provides a forum for the development of uniform policies when appropriate. It also offers an online form for filing complaints, reporting suspected insurance fraud and downloading key financial information about insurance carriers at
Insurance Information Institute (III)
This organization’s mission is to improve public understanding of insurance – what it is and how it works. Visit III at
Get competitive quotes for commercial liability insurance and all your business insurance needs at http://www.EINSURANCE.com/business-insurance/.
Related General Liability and Other Business Insurance Articles
Premises Liability Insurance Basics for Small Business
What’s the Difference Between Workers Compensation and Employee Disability Insurance?
How to Save on Workers Compensation Insurance for Small Business, Part I
How to Shop for Commercial Fleet Insurance
Last Updated: 7/7/2011