Contractors call us regularly asking for “a certificate of insurance” — usually because a GC or a homeowner is requiring proof. We hand over the cert, the job goes on, and that’s the end of it. But when we actually look at what the contractor is carrying, about half the time there’s a serious gap between their policy and their actual exposure. Here’s the full stack most Michigan contractors should have.
1. General liability (the foundation)
Every contractor needs general liability. It covers:
- Bodily injury to third parties on your job site
- Property damage you cause (you back into a fence, etc.)
- Completed operations — damage discovered after you’ve left the job
- Legal defense costs
Typical limits: $1M per occurrence / $2M aggregate. Some GCs and commercial projects require higher limits.
Watch for: residential vs commercial classifications. A GL policy rated for residential work that gets used on a commercial project can be denied. If you’re crossing into commercial, tell your agent.
Typical cost: $800–$2,500/year depending on trade and revenue.
2. Tools and equipment (inland marine)
General liability doesn’t cover your own stuff. If your trailer full of tools gets stolen overnight, GL doesn’t pay. You need inland marine coverage.
This is a scheduled property policy that covers tools, equipment, mobile machinery, and sometimes materials in transit. Some policies cover:
- Theft (including from vehicles)
- Fire and vandalism
- In-transit damage
- Rental equipment you’re responsible for
Typical cost: $300–$1,200/year depending on the value of scheduled equipment.
3. Commercial auto
Your personal auto policy almost certainly excludes business use. If you drive a work truck loaded with materials and tools to a job site, you need commercial auto.
Commercial auto covers:
- Liability for accidents during business use
- Physical damage to the vehicle
- Michigan no-fault PIP (with the same tier decisions as personal auto — do not short PIP)
- Often: coverage for tools and materials in the vehicle up to a small sub-limit
Big mistake: using a personal policy “because the truck is in your personal name.” Your insurer can still deny the claim if it happens during a business use. Title vs. use are separate questions.
Typical cost: $1,800–$4,500/year per vehicle depending on vehicle, driving record, and use.
4. Workers’ compensation
Required in Michigan once you have 3+ employees or 1+ employee working 35+ hours/week for 13+ weeks. If you subcontract work to uninsured subs, you’re often responsible for their workers’ comp — meaning an audit could hit you with significant retroactive premium.
Construction class codes are some of the highest in Michigan comp rates. Roofing, tree work, and framing are expensive. Clerical-only employees (estimators, office staff) get their own lower rate.
If you’re a sole proprietor with no employees, you can often get a ghost policy ($500–$1,200/year) to satisfy GCs who require a COI.
5. Commercial umbrella
A million in GL and a million in commercial auto sounds like a lot. It’s not.
One serious injury on a job site or a multi-vehicle accident involving your company truck can exceed $1M easily. A commercial umbrella sits on top of your GL and commercial auto, typically in $1M increments.
Typical cost: $400–$1,200/year per $1M of additional limit. It’s one of the cheapest dollars you can spend on risk management.
6. Builders risk (project-specific)
If you’re building something — a new home, an addition, a commercial structure — there’s a period before it’s done where it’s not yet covered by a homeowner’s or building owner’s policy. Builders risk fills that gap.
Covers the structure under construction against fire, theft, vandalism, and often weather events. Usually bought per-project for projects over a certain value. Costs vary wildly based on project size.
7. Professional liability (for design-build contractors)
If you provide design services along with construction — not just following someone else’s plans — you may need professional liability (errors & omissions) for claims arising from your designs, not just your workmanship.
Most residential remodelers don’t need this. Design-build firms and contractors who offer engineering input usually do.
The certificate of insurance trap
GCs and homeowners often require a certificate of insurance (COI) listing them as additional insured. Make sure:
- Your policy actually allows additional insureds (most GL policies do)
- The COI is issued by your carrier or agent, not a self-made document
- The limits on the cert match what the contract requires
- The cert is current — old certs aren’t useful and can put you in breach of contract
Additional insured vs certificate holder
These aren’t the same thing. A certificate holder just gets a copy of the certificate. An additional insured is actually added to your policy as a protected party. If a contract requires “additional insured,” issuing a cert with them as certificate holder isn’t enough. Your agent has to endorse the policy.
Common mistakes we see
- Carrying the same coverage you had 5 years ago — your revenue and exposure have probably grown. Limits that were fine when you were a one-person operation aren’t enough when you have a crew of five.
- Letting the auto stay in “personal” rating — if your business grows and you’re still rated personal, one claim can blow up.
- Classifying yourself in a lower-risk class code to save money — carriers audit. Misclassification is fraud.
- Skipping the COI details — a deal can fall apart or a job can be stopped if the cert is wrong.
Before you bid a big job
If you’re about to take on a significantly larger project than usual, call or text us first. We’ll review your current stack, spot any gaps relative to the contract, and make sure you’re actually covered for what you’re about to sign up for. A 15-minute call before the contract beats a six-figure coverage dispute after something goes wrong.