Under Michigan insurance requirements, what additional coverage must contractors carry when working on projects over $50,000?
Correct Answer
D) No additional coverage required
Michigan does not require additional insurance coverage based solely on project value over $50,000, though individual contracts may require it.
Why This Is the Correct Answer
Michigan's contractor licensing statutes and LARA regulations do not impose a blanket requirement for additional insurance coverage based solely on a project value threshold of $50,000. The baseline insurance requirements (general liability and workers' compensation) apply regardless of project size. Individual contracts or bonding requirements may add coverage, but the state law itself does not mandate extra coverage at this dollar threshold.
Why the Other Options Are Wrong
Option A: Professional liability insurance
Professional liability (errors and omissions) insurance is not mandated by Michigan state law for general contractors on projects exceeding $50,000. This type of coverage is more common for design professionals (architects, engineers) and is not a standard requirement tied to project value thresholds.
Option B: Completed operations coverage
Completed operations coverage (a component of general liability for post-completion claims) is not specifically required as an add-on by Michigan state law for projects over $50,000. Some commercial contracts may require it, but there is no statutory threshold-based mandate.
Option C: Increased general liability limits
Michigan does not set escalating general liability coverage limits based on a $50,000 project value threshold. While contractors must carry the minimum required limits, the law does not increase those limits automatically when a project exceeds this amount.
Memory Technique
Remember: Michigan contractor insurance rules are 'flat, not tiered.' There is no dollar-value escalator in state law. The magic number $50,000 is a distractor — it does not trigger extra insurance under Michigan statute.
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