Do independent contractors need business insurance?

Business Insurance Requirements for Independent Contractors in Michigan

In Michigan, independent contractors are not legally required to carry business insurance. However, obtaining appropriate insurance coverage is a practical step to protect your operations and finances.

Recommended Insurance Types for Independent Contractors

• General Liability Insurance: Protects against third-party claims for bodily injury or property damage related to your work.
• Professional Liability Insurance: Also known as errors and omissions insurance, this covers claims arising from mistakes or negligence in professional services.
• Commercial Auto Insurance: Required if you use a vehicle for business purposes beyond personal use.
• Workers' Compensation Insurance: Typically not required for independent contractors unless they hire employees.
• Business Owner’s Policy (BOP): Bundles general liability and property insurance, often providing cost savings.

Operational Considerations

Many clients or contracts in Michigan may require independent contractors to carry certain insurance policies as a condition of engagement. Having insurance can also improve your credibility and reduce financial risks.

Consider integrating insurance costs into your pricing and maintaining clear recordkeeping of your policies for compliance and client verification.

As of 2026

Insurance requirements can vary by industry and contract terms. Regularly review your insurance needs and stay informed about any changes in Michigan regulations or industry standards.