Under Michigan law, what is the minimum automobile liability insurance coverage required for a contractor's commercial vehicle?
Correct Answer
C) $20,000/$40,000/$10,000
Michigan requires minimum auto liability coverage of $20,000 per person, $40,000 per accident for bodily injury, and $10,000 for property damage.
Why This Is the Correct Answer
Michigan's minimum automobile liability insurance for commercial vehicles is $20,000 per person / $40,000 per accident for bodily injury, and $10,000 for property damage (often written as 20/40/10). These are the statutory minimums established under Michigan's no-fault insurance framework for commercial vehicles used by contractors.
Why the Other Options Are Wrong
Option A: $250,000/$500,000/$100,000
$250,000/$500,000/$100,000 far exceeds the statutory minimum. These limits are typical of larger commercial fleet policies or umbrella requirements but are not the state-mandated minimums for contractor vehicles.
Option B: $100,000/$300,000/$50,000
$100,000/$300,000/$50,000 also exceeds the statutory minimum. This split might reflect common commercial auto policy offerings but is not the legal floor under Michigan law.
Option D: $50,000/$100,000/$25,000
$50,000/$100,000/$25,000 is higher than the statutory minimum. It may appear reasonable, but Michigan's actual minimum for commercial vehicles is the lower 20/40/10 structure.
Memory Technique
Use the mnemonic '20-40-10 = Two fours and a one' (20, 40, 10 — doubling pattern plus 10). Alternatively: think of 20/40 as the familiar 20/40 vision test — body injury limits — and 10 as property damage. It is the smallest set of numbers among the choices.
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