Michigan small business insurance requirements: the two workers' compensation tests, no-fault auto with PIP choices and property protection

Michigan: what the state requires of a small business

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In Michigan, a private employer must carry workers' compensation if it regularly employs three or more people at one time, or if any one employee has worked 35 or more hours a week for 13 weeks or longer in the past year; every registered vehicle must carry at least $50,000 per person, $100,000 per accident and $10,000 property damage liability, personal injury protection at a chosen level and $1 million of property protection insurance.

Reviewed by CoverMatch licensed agents, Licensed property & casualty agents · Reviewed Oct 11, 2026 Updated Oct 30, 2026

Michigan rules with sources
Topic	The rule in Michigan	Source
Workers' compensation	A private, non-agricultural employer is subject to the Act if it regularly employs three or more employees at one time, or if it regularly employs fewer than three but at least one has worked 35 or more hours per week for 13 weeks or longer during the preceding 52 weeks; either test alone brings the employer in. Public employers are covered regardless of headcount; agricultural employers follow separate rules.	MCL 418.115; Michigan Workers' Disability Compensation Agency — Employer coverage
Securing coverage and penalties	Covered employers insure with an authorized carrier or obtain self-insurance authority from the Agency; failing to secure coverage is a misdemeanor with fines and possible imprisonment, and the employer is liable for benefits and may be enjoined from operating.	MCL 418.611 and 418.641; Michigan Workers' Disability Compensation Agency — Insurance requirements
No-fault auto: liability and property protection	Residual bodily injury liability of at least $50,000 per person / $100,000 per accident (the default is $250,000 / $500,000 unless the lower limit is selected in writing) and $10,000 property damage for out-of-state accidents, plus $1,000,000 of property protection insurance for damage to other people's property in Michigan.	MCL 500.3009 and 500.3121; Michigan Department of Insurance and Financial Services — Auto insurance requirements
Personal injury protection choices	Since July 2, 2020, policyholders choose a PIP medical level: unlimited, $500,000, $250,000, $50,000 for Medicaid enrollees, or an opt-out for those with qualifying health coverage; the choice must be made on the policy and renewals.	MCL 500.3107c and 500.3107d (2019 PA 21); Michigan Department of Insurance and Financial Services — PIP choice

Topic

The rule in Michigan

Source

Workers' compensation

A private, non-agricultural employer is subject to the Act if it regularly employs three or more employees at one time, or if it regularly employs fewer than three but at least one has worked 35 or more hours per week for 13 weeks or longer during the preceding 52 weeks; either test alone brings the employer in. Public employers are covered regardless of headcount; agricultural employers follow separate rules.

MCL 418.115; Michigan Workers' Disability Compensation Agency — Employer coverage

Securing coverage and penalties

Covered employers insure with an authorized carrier or obtain self-insurance authority from the Agency; failing to secure coverage is a misdemeanor with fines and possible imprisonment, and the employer is liable for benefits and may be enjoined from operating.

MCL 418.611 and 418.641; Michigan Workers' Disability Compensation Agency — Insurance requirements

No-fault auto: liability and property protection

Residual bodily injury liability of at least $50,000 per person / $100,000 per accident (the default is $250,000 / $500,000 unless the lower limit is selected in writing) and $10,000 property damage for out-of-state accidents, plus $1,000,000 of property protection insurance for damage to other people's property in Michigan.

MCL 500.3009 and 500.3121; Michigan Department of Insurance and Financial Services — Auto insurance requirements

Personal injury protection choices

Since July 2, 2020, policyholders choose a PIP medical level: unlimited, $500,000, $250,000, $50,000 for Medicaid enrollees, or an opt-out for those with qualifying health coverage; the choice must be made on the policy and renewals.

MCL 500.3107c and 500.3107d (2019 PA 21); Michigan Department of Insurance and Financial Services — PIP choice

Workers' compensation in Michigan

Michigan uses two independent tests: three or more employees at one time, or one employee at 35 hours a week for 13 weeks within the past year. Meeting either one makes the employer subject to the Act. Michigan is not a monopolistic state, so coverage comes from private carriers or Agency-approved self-insurance, and the standard policy includes employer's liability. Going without is a misdemeanor and leaves the employer paying benefits directly.

Auto liability in Michigan

Michigan's no-fault system changed on July 2, 2020. Liability now has a 50/100/10 floor with a 250/500 default, policyholders choose their PIP medical level, and every policy carries $1 million of property protection for damage to other people's property in the state. Commercial vehicles are usually written above the floor, often at a $1M combined single limit for liability, with the PIP level chosen for the people who ride in them.

Licensing in Michigan

Residential builders and maintenance and alteration contractors are licensed by the Department of Licensing and Regulatory Affairs with pre-licensure education and an exam; electricians, plumbers and mechanical contractors by their own boards. The licenses do not themselves require insurance, but workers' compensation applies under the tests above and customers ask for a general liability certificate.

How CoverMatch uses these rules

A Michigan business in the wallet is checked against these rules: workers' compensation when either employment test is met from reported headcount and hours, the no-fault package on scheduled vehicles, and the license evidence for building trades. Each rule links to its source, and a licensed agent reviews this page before it publishes and whenever the rules change.

Sources

Questions people actually ask

My Michigan bakery has two employees, one full-time. Do I need workers' compensation?

Yes. The second test is met as soon as one employee has worked 35 hours a week for 13 weeks in the past year, even though you have fewer than three people.

What is property protection insurance and why is it $1 million?

It is the no-fault coverage that pays for damage your vehicle does to buildings, fences and parked cars in Michigan. The $1 million limit is mandatory on every Michigan policy, personal or commercial.

Can a business fleet choose the lowest PIP option?

The PIP medical choice is made on the policy and depends on who is covered and their health coverage. Fleets often keep a higher level because employees ride in the vehicles; a licensed agent walks through the options at each renewal.

By business type in Michigan