A contractor employs 15 workers in Michigan. Which workers compensation requirement applies?
Correct Answer
B) Required coverage through approved carrier
Michigan requires employers with 3 or more employees to carry workers compensation insurance through an approved carrier, state fund, or qualified self-insurance.
Why This Is the Correct Answer
Michigan's Workers' Disability Compensation Act requires employers with 3 or more employees to carry workers' compensation coverage. With 15 employees, this contractor far exceeds the threshold. Coverage must be obtained through a licensed insurance carrier, the state's assigned risk plan, or through an approved self-insurance arrangement — the key point is that coverage is mandatory and must go through an approved mechanism.
Why the Other Options Are Wrong
Option A: Required coverage through state fund only
Michigan does not require employers to use the state fund exclusively. Coverage can be obtained through any approved private carrier, the assigned risk pool, or self-insurance. Restricting employers to only the state fund would be incorrect.
Option C: Optional coverage
Workers' compensation is not optional for Michigan employers with 3 or more employees. With 15 workers, this contractor has a legal obligation to maintain coverage. 'Optional' is never the correct answer when the employer exceeds the threshold.
Option D: Self-insurance only
Self-insurance is a permitted option in Michigan, but only for large employers who obtain specific state approval — it is not the only option. Saying 'self-insurance only' is incorrect because most contractors use approved commercial carriers.
Memory Technique
Remember '3 or more = insure.' Once a Michigan employer reaches 3 workers, workers' comp coverage becomes mandatory — no exceptions, no opt-outs.
More Michigan Questions
A Michigan contractor forms an S-Corporation. What is the maximum number of shareholders allowed?
A contractor's employee is injured on a job site in Michigan. The contractor's workers' compensation insurance has a $500 deductible per claim. The total medical costs are $12,500 and lost wages are $3,200. What is the contractor's out-of-pocket cost for this claim?
What is the minimum general liability insurance coverage amount required for Michigan residential builders?
Under Michigan Act 299, what is the consequence for a contractor who performs work outside the scope of their license classification?
A contractor discovers that a subcontractor has filed a construction lien against their project. The general contractor believes the lien is invalid. What is the primary legal mechanism to challenge the lien in Michigan?
Under Michigan Act 299, what happens if a contractor continues to work without a valid license after it expires?
Which of the following best describes the 'pay when paid' clause limitation under Michigan law?
A project has total costs of $180,000 including $75,000 labor and $105,000 materials. With workers compensation at 7.8% of labor costs and general liability at 0.4% of total costs, what are the combined insurance costs?
A Michigan contractor is forming an LLC. What is the minimum general liability insurance coverage required for residential builders under Michigan law?
Under Michigan Act 299, a contractor's license must be renewed every:
People Also Study
Business & Financial Management
120 questions · 70% to pass
Contract Administration
60 questions · 70% to pass
Project Management
60 questions · 70% to pass