In 1912, Michigan responded to the rise of industrialization with the adoption of a Workmen’s Compensation Act.
Workmen’s compensation, or workers’ compensation, provides wage replacement, medical care and rehabilitation benefits to individuals injured at work, and protects employers by limiting their liability.
Nearly all Michigan employers are subject to the Workers' Disability Compensation Act, and must carry coverage for their employees.
Michigan has a strict workers’ compensation system. Businesses must cover their employees with a work comp insurance policy if any of the following apply:
If all employees can be excluded according to one of the above exceptions and no subcontractors are used in the operation of the business, the employer can file an exclusion.
Otherwise, the employer must get coverage, but can talk to their insurer about excluding applicable employees from the policy to reduce their premium.
Michigan has a private market. Employers can purchase workers' compensation insurance from any insurance carrier or agency that is licensed to write in that state.
To get workers’ comp coverage:
Most small businesses will start shopping with their local broker or insurance agency. However, many independent agencies can’t or won’t write work comp because it’s often more difficult and less profitable work for them. For straightforward advice and competitive quotes, contact an agency that specializes in work comp.
Michigan also maintains a state fund that competes with the private market. If you’re still having trouble finding coverage, you can contact the Compensation Advisory Organization of Michigan (CAOM).
Small business workers’ compensation cost can vary depending on the business. The insurance premium factors in the type of work employees perform, number of employees being covered and past coverage and claims. Learn more about workers’ comp insurance rates >>
Editor’s note: Last updated October 7, 2018