Detroit, MI Contractor Insurance

General liability (GL) is the policy every client asks about first. It covers claims from third parties, meaning people and property outside your own business, when your work causes injury or damage. The common structure for contractors is $1 million per occurrence and $2 million aggregate, which means the policy pays up to $1 million on any single claim and $2 million total during the policy term.

What GL doesn't do matters just as much. It won't pay for injuries to your own employees, damage to your own tools, or accidents in your work truck. It also typically excludes faulty workmanship itself, meaning the cost to redo a bad tile job, while still covering the resulting damage that bad work causes to other property.

Property Damage and Third-Party Injuries

This is the bread and butter of GL claims. A plumber's fitting fails during installation and floods a finished basement in Grosse Pointe. A roofer's tarp blows loose during lake-effect wind and a passerby trips over debris on the sidewalk. A painter's drop cloth slides on hardwood and a client breaks a wrist.

Each of those scenarios lands on your general liability policy. Water damage claims are especially common in Detroit's older housing stock, where century-old plumbing and freeze-thaw cycles turn small mistakes into five-figure repairs. One thing to keep in mind: some policies carry exclusions for specific work types, like roofing above a certain height or work on condos. Check your exclusions page line by line.

Completed Operations and Product Liability

Here's where many contractors get burned. Completed operations coverage protects you after the job is finished and you've left the site. If a deck you built in May collapses in October, that's a completed operations claim.

Some cheaper policies limit or exclude this coverage, which makes them nearly worthless for builders and remodelers. Product liability applies when materials you supplied or installed cause harm. If you install a water heater that later leaks or a fixture that fails, your exposure doesn't end when you cash the check. Ask your agent directly whether completed operations carries its own aggregate limit and how long it applies.

Your general liability policy won't replace a stolen compressor. Neither will most commercial property policies once your gear leaves your shop. For that, you need inland marine coverage, often called a tools and equipment floater, which follows your equipment wherever it goes: job sites, trailers, your truck bed.

Most Michigan contractors pay between $300 and $1,200 a year for inland marine coverage, depending on equipment value, theft history, and deductible. Tool theft from trucks and unsecured job sites is one of the most frequent claims contractors file, and Detroit's mix of active construction zones and vacant lots doesn't help.

There are three related coverages worth understanding:

• Tools and equipment floater: Covers hand tools, power tools, and smaller equipment, often on a scheduled or blanket basis.
• Contractor's equipment coverage: Designed for heavier, higher-value items like skid steers, excavators, and lifts, usually scheduled by serial number.
• Installation floater: Protects materials and work-in-progress before the project is handed over, such as HVAC units delivered but not yet installed, or cabinets sitting in a garage overnight.

The installation floater is the one contractors forget. If copper piping gets stripped from a half-finished rehab before the owner's builder's risk kicks in, or if there's no builder's risk at all, that loss is yours.

Goal: Keep a current equipment list with serial numbers, purchase dates, and photos. Adjusters move faster when you can prove what you owned.

A personal auto policy usually won't respond if you're hauling tools, towing a trailer, or driving between job sites under your business name. Insurers often deny those claims outright, and Michigan's no-fault system adds layers of personal injury protection that make getting the right policy even more important.

Commercial auto covers liability for injuries and damage you cause, physical damage to your vehicles, and Michigan's required no-fault benefits. It also handles situations personal policies don't, such as employees driving company vehicles or a vehicle titled to your LLC.

Watch for these common gaps:

1. Hired and non-owned auto: If an employee runs to the supply house in their own car and causes a wreck, the injured party may sue your business. This endorsement covers that exposure.
2. Trailer coverage: Make sure your trailers are listed, and confirm whether the tools inside are covered by auto or by your inland marine policy. Usually it's the latter.
3. Upfitted equipment: Ladder racks, shelving, and toolboxes may need to be scheduled separately to be covered at full value.

Winter matters here too. Detroit's freeze-thaw cycles and lake-effect snow drive up accident frequency between November and March, and your loss history follows you into renewal pricing. Driver training and telematics can help you argue for better rates.

Michigan's Workers' Disability Compensation Act requires most employers to carry workers' compensation insurance. The state's Workers' Disability Compensation Agency enforces it, and penalties for operating without required coverage can include fines, stop-work issues, and personal liability for the full cost of an employee's injury.

Construction is a high-risk class, so workers' comp is often your largest insurance expense. Rates are based on your payroll, the classification codes for your trade, and your experience modification rate, which reflects your claims history compared to similar businesses. Strong OSHA compliance, documented fall protection, and regular toolbox talks don't just keep people safe. They keep your mod rate down.

Coverage for Medical Bills and Lost Wages

When a worker gets hurt on the job, workers' comp pays for medical treatment and a portion of lost wages while they recover. It can also cover rehabilitation and, in the worst cases, death benefits for the worker's family.

In exchange, the employee generally gives up the right to sue you for that injury. That trade-off protects your business from lawsuits that could easily outrun your general liability limits. Most policies also include employer's liability coverage, which responds when a third party, like a general contractor, gets pulled into an employee injury lawsuit.

A frequent problem in Detroit: uninsured subcontractors. If you hire a sub without their own workers' comp and their worker gets hurt, your policy may end up paying, and your auditor will charge you premium on that sub's payroll. Collect certificates from every sub, every time.

Exemptions for Sole Proprietors and Partners

Sole proprietors, partners, and certain LLC members aren't automatically required to cover themselves under Michigan law. That said, exemption isn't the same as being protected. If you fall off a roof with no coverage, your health insurance may deny the claim as work-related, and you'll have no wage replacement while you heal.

Many general contractors also won't let you on site without a workers' comp certificate, exempt or not. Some contractors in this situation buy a minimum policy or a "ghost" policy to satisfy contracts. Ask your agent which option makes sense for your structure and the clients you work with.

Bonds show up in Detroit work more often than many contractors expect, particularly for city permits and public projects. The City of Detroit requires a $50,000 Uniform Surety Bond for wrecking and demolition contractors, and house movers operating in the city must secure a $20,000 surety bond under the same application process.

Beyond city licensing, you'll run into several bond types:

• License and permit bonds: Required by a city or agency before you can perform certain work.
• Bid bonds: Guarantee you'll honor your bid and sign the contract if selected.
• Performance bonds: Guarantee you'll finish the project according to the contract.
• Payment bonds: Guarantee you'll pay your subs and suppliers.

Your ability to get bonded depends heavily on your credit, financial statements, and work history. Keep your books clean and your LARA license current, since a lapsed license during your three-year cycle can stall a bond application right when you need it.

The Difference Between Insurance and Bonding

Insurance protects you. A bond protects your client. That's the cleanest way to think about it.

When an insurance claim gets paid, the insurer absorbs the loss. When a surety pays a bond claim, it expects you to pay it back, often under a personal indemnity agreement you signed. A bond is closer to a line of credit backed by your reputation than a safety net.

This is why a bond claim can hurt more than an insurance claim. It can drain your personal assets and make future bonding difficult or expensive.

A certificate of insurance is a one-page summary of your coverage, usually on an ACORD 25 form. It lists your carriers, policy numbers, limits, and effective dates. Clients use it to confirm you're insured before you start work. General contractors use it to protect themselves from your claims.

Here's what clients typically ask for on Detroit projects:

1. Additional insured status: The client or GC is added to your GL policy, giving them direct coverage for claims arising from your work. This requires an actual endorsement, not just a name on the certificate.
2. Waiver of subrogation: Your insurer agrees not to go after the client to recover claim costs.
3. Primary and non-contributory wording: Your policy pays first, before the client's own insurance.
4. Notice of cancellation: The client wants to know if your coverage lapses.

Important: A certificate doesn't grant coverage by itself. If your policy doesn't include the endorsement, writing it on the COI changes nothing, and you may have breached your contract.

If you're a property owner hiring a contractor, don't stop at the certificate. Request to be named as an additional insured, confirm the endorsement exists, and ask for the full policy or at least the endorsement pages. Call the agent listed to verify the policy is active. Certificates get forged and outdated more often than people realize.

For your own business, set calendar reminders 30 days before each renewal and send updated certificates proactively. Late COIs hold up payment applications.

Umbrellas are often the cheapest way to meet higher contract thresholds. A serious auto accident involving your crew truck can blow through a standard auto limit fast, and the umbrella catches what's left.

The catch is that umbrellas follow the underlying policy's terms. If your GL excludes something, your umbrella likely does too. Some "excess" policies are even narrower than true umbrellas, so ask which you're buying.

Contractors starting out ask a lot of the same questions. Here are short answers to the ones that come up most.

Common Costs and Compliance Questions

Do I need insurance to get a Michigan contractor license? LARA's Residential Builder and M&A licenses focus on exams and qualifications, but workers' comp may be required if you have employees. In practice, your clients and the City of Detroit will demand insurance long before the state does.

How much does tools and equipment coverage cost? Most Michigan contractors pay between $300 and $1,200 a year for inland marine coverage. Your cost depends on equipment value, deductible, and claims history.

What liability limit do Detroit commercial clients expect? The common standard is $1,000,000 per occurrence. Larger projects often require an umbrella policy to reach higher totals.

Can I use my personal truck insurance for work? Usually not if you're hauling tools or driving between job sites for business. Insurers can deny those claims, so commercial auto is the safer choice.

What's the difference between occurrence and claims-made coverage? Occurrence policies cover incidents that happen during the policy period, even if the claim comes years later. Detroit's 2026 professional services contracts require occurrence forms unless they aren't commercially available.

Why did my workers' comp audit cost more than expected? Auditors often add premium for uninsured subcontractors on your payroll. Collect a current certificate from every sub before they start.

Every coverage decision you make comes back to one question: who pays when something goes wrong? General liability handles third-party damage, inland marine protects your tools and work-in-progress, commercial auto covers your vehicles, and workers' comp protects your crew. Bonds back your promises to clients, and certificates prove all of it.

The best coverage plan for a Detroit contractor isn't the cheapest quote. It's the plan that matches your license type, your trade's real risks, and the contract terms your clients actually require.

Your next steps are simple. Pull your current policies and compare them against your three largest contracts. Confirm completed operations coverage, additional insured endorsements, and occurrence forms. Then sit down with an independent agent who writes contractor policies in Michigan regularly and ask hard questions about exclusions. Fixing a gap costs far less before the claim than after it.