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Michigan business insurance: requirements and costs

Michigan has no state fund and no bureau that files comp rates: each insurer files its own rates with DIFS, using advisory pure premiums from the Compensation Advisory Organization of Michigan (CAOM) if it chooses.⁠1 CAOM's advisory pure premiums for January 1, 2027 average a 0.0% change.⁠1 Comp is required at three regularly employed workers, and the default auto liability limits since July 2020 are $250,000 per person and $500,000 per accident.⁠3⁠7

Checked against 13 sources Last reviewed How we check figures

Michigan at a glance

Workers’ comp required3+ employees at one time, or 1 working 35+ hrs for 13+ weeks
Where employers buy itPrivate insurers
Rates set byCompensation Advisory Organization of Michigan
Employer comp cost, 2023$0.56 per $100 of covered wages (US $0.98)
Comp rate index, 2024$0.90, ranked 36 of 51 (1 = most expensive)
Employer health premium, 2025$8,230 single, $23,800 family (average total premium)
Auto liability minimum250/500/10

Michigan's workers' comp market is private and open to competition. An employer must either self-insure with the director's authorization or buy from an insurer authorized to write comp in the state.⁠5 CAOM is the state's data collection agency and also runs the Michigan Workers' Compensation Placement Facility, the assigned-risk plan for employers that cannot find voluntary coverage.⁠2 CAOM does not set rates. Its circular says carriers may use its pure premiums with their own expense loadings, add trend factors, or make their own rates independently, and any experience-rating or other rating values must be filed with the Department of Insurance and Financial Services (DIFS) for approval.⁠1 Two Michigan employers in the same class can therefore be quoted different rates for the same work. The pure premiums are advisory: they cover loss, loss adjustment expense and loss-based expense per $100 of payroll, and exclude trend, profit and general expenses.⁠1 CAOM's circular of August 13, 2026 reports that the pure premiums effective January 1, 2027 for new and renewal business represent an average change of 0.0% from those effective January 1, 2026, with individual classes moving above or below the average.⁠1

The official cost data put Michigan well under the national figure. NASI estimates that Michigan employers spent $0.56 per $100 of covered wages on workers' comp in 2023, against $0.98 nationally. Michigan's figure was $0.66 in 2019, a 15.6% drop by our calculation, close to the 16.3% national decline.⁠10 Oregon's 2024 ranking, based on rates in effect January 1, 2024, put Michigan 36th most expensive of 51 jurisdictions, at an index of $0.90 per $100 of payroll, 82% of the median state.⁠11 Health benefits are a different story for small employers. In AHRQ's 2025 survey, 31.4% of Michigan private-sector establishments in firms with fewer than 50 employees offered health insurance, against 32.1% nationally. Where they did, the average single premium was $8,384 against $9,034 nationally, about 7% lower by our calculation, and the employee's share averaged $2,075 against $1,924.⁠12

Auto is where Michigan law changed most recently for cost. Since July 2, 2020, a liability policy for a vehicle registered or principally garaged in the state must carry at least $250,000 for injury to one person and $500,000 for two or more people in an accident, plus $10,000 for property damage. The buyer can choose lower bodily injury limits, down to $50,000 and $100,000, only by signing a form issued by the director, and the insurer must quote a price for each option.⁠7 Michigan is also a no-fault state: for policies issued or renewed after July 1, 2020, the named insured selects a personal protection insurance (PIP) medical limit of $250,000, $500,000 or unlimited. A $50,000 option exists only if the insured is enrolled in Medicaid and household members have other qualifying coverage.⁠8 For a business, the practical effect is that the liability limit and the PIP level are both choices stated on the application, so two commercial auto quotes are comparable only if both match.

Workers’ compensation in Michigan

Private non-agricultural employers must carry comp if they regularly employ three or more employees at one time, or fewer than three if at least one has worked for them 35 or more hours a week for 13 weeks or longer in the preceding 52 weeks. All public employers are covered regardless of size.⁠3

Who is exempt

  • Agricultural employers are covered only for regular hourly or salaried employees, with 3 or more of them working 35+ hours a week for 13+ consecutive weeks in the preceding 52 weeks; agricultural employers with 1 or more employees working 35+ hours for 5+ consecutive weeks must provide medical and hospital coverage
  • A policy endorsement can exclude named partners, or the spouse, child or parent in the employer's family
  • A manager-member who owns at least 10% of an LLC with no more than 10 members may elect exclusion, with the LLC's majority-vote consent
  • An officer who owns at least 10% of a corporation with no more than 10 stockholders may elect exclusion with the board's consent, by written notice to the carrier

Buying coverage and who sets the rates

Employers buy from an insurer authorized to write comp in Michigan, or self-insure with the director's authorization.⁠5 Employers that cannot get voluntary coverage apply to the Michigan Workers' Compensation Placement Facility, administered by CAOM.⁠2 There is no state fund.

Latest rate decision (1 Jan 2027): CAOM Circular #369 (Aug. 13, 2026): statewide average advisory pure premiums for new and renewal business effective Jan. 1, 2027 change by 0.0% from Jan. 1, 2026. These are advisory loss costs; carriers file their own rates with DIFS. Official notice.

An individual employer may be authorized by the director on a reasonable showing of solvency and ability to pay. Two or more employers in the same industry with combined assets of $1,000,000 or more, or two or more public employers of the same type, may be permitted to pool liabilities as a group self-insurer.⁠5

Penalties for going without

An employer that fails to secure payment of compensation is guilty of a misdemeanor, with a fine of up to $1,000, up to 6 months in jail, or both, and each day's failure is a separate offense.⁠6 An injured employee of such an employer can sue for damages in a civil action despite the exclusive-remedy rule. Corporate officers and directors are jointly and severally liable for amounts the director recovers from an uninsured corporation.⁠6

What Michigan employers pay

Employer workers’ compensation costs per $100 of covered wages, 2019–2023
YearMichiganUnited States
2019$0.66$1.17
2020$0.61$1.08
2021$0.57$1.01
2022$0.58$1.00
2023$0.56$0.98

Employer cost per $100 of covered wages: premiums paid by insured employers plus benefits and administrative costs of self-insured employers, divided by the wages of workers covered by workers’ compensation. The United States figure is NASI’s national total, which includes federal programs. Source: National Academy of Social Insurance (NASI), published 11 Aug 2026.

Oregon’s biennial comparison of workers’ comp rates puts Michigan’s index for rates in effect on 1 January 2024 at $0.90 per $100 of payroll, 18% below the national median of $1.09 (rank 36 of 51, where 1 is the most expensive). The index prices the same 50 risk classes, weighted by Oregon payroll, in every state, so it compares rate levels rather than what employers actually pay. Compare every state.

Employer health insurance in Michigan

Average annual premium per enrolled employee at private-sector employers, 2025
MeasureMichiganFirms under 50United States
Single coverage, total premium$8,230$8,384$9,025
Family coverage, total premium$23,800$23,191$26,281
Employee share, single$1,970–$1,817
Employers offering coverage48.4%31.4%49.2%

Average total annual premium per enrolled employee at private-sector establishments that offer health insurance; the offer rate is the share of establishments offering coverage. Small firms have fewer than 50 employees. Source: Agency for Healthcare Research and Quality (AHRQ), Center for Financing, Access and Cost Trends, 2025 survey year. All states.

Commercial auto in Michigan

Every vehicle registered in Michigan, including business vehicles, must carry at least 250/500/10 in liability limits (bodily injury per person / per accident / property damage, in thousands of dollars). Official source.

Default since July 2, 2020 is $250,000 per person, $500,000 per accident for bodily injury and $10,000 property damage. The buyer may choose lower bodily injury limits, not below $50,000/$100,000, on a director-issued form.⁠7 Michigan is no-fault: PIP medical limits are $250,000, $500,000 or unlimited, with $50,000 only for Medicaid enrollees meeting the statute's conditions.⁠8 In-state property damage is paid through property protection insurance, capped at $1,000,000 per accident.⁠9

Trucks and buses used in interstate commerce must also meet federal minimums of $750,000 to $5 million: see commercial auto minimums and what commercial auto costs.

Other Michigan rules that affect insurance costs

Corporate officers and LLC members can opt out of comp

An officer-stockholder owning at least 10% of a corporation with no more than 10 stockholders, or a manager-member owning at least 10% of an LLC with no more than 10 members, may elect to be excluded from comp. The corporation or LLC must consent and the employee gives written notice to the carrier. The exclusion lasts until revoked in writing.⁠4 If everyone covered by the policy is excluded this way, they notify the director on a prescribed form.⁠4

Lower auto liability limits require a signed form

Choosing liability below $250,000/$500,000 requires the named insured to complete a form issued by the director. The insurer must offer the available liability options and a price for each at application and renewal.⁠7 Comparing those quoted prices shows what the default limit adds to your premium.

No state fund, but an assigned-risk plan

The Placement Facility is the residual market for comp, and CAOM posts its assigned-risk rate filing and rating values.⁠2 These apply to employers placed in the facility, not to voluntary-market policies, which are priced from insurers' own filings.⁠1

Michigan compared with its neighbors

Workers’ comp and health insurance costs, Michigan and neighboring states
Michigan$0.56$0.90$8,230
Ohio$0.58$0.68$8,804
Indiana$0.57$0.71$8,355
Wisconsin$1.21$1.42$9,557

Sources

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National figures: NASI (employer comp costs), Oregon DCBS (rate index), AHRQ MEPS-IC (health premiums).

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Other states

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