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Michigan workers' compensation is a no fault system. State law help prevent employers from being sued by employers and limits the benefits to injured workers. This insurance replaces wages for injured employees and covers the cost of medical care and rehabilitation wo injured employees.
Most employers are required by law to purchase coverage. Private employers who have 3 or more employees at any time are required to buy a policy. Employers with one or more employees that work 35 or more hours per week for 13 weeks or more are also required to buy coverage.
Employers who do not have coverage could be liable to pay expenses for injured employees even if they are not required to purchase coverage.
Michigan is a non-NCCI state. State regulations are governed by:
Compensation Advisory Board of Michigan (CAOM)17197 N Laurel Park Drive, Suite 311Livonia, MI 48152734-462-9600
Employers who have had coverage for two years may be assigned an Experience Mod once they have been in business and have had coverage for two years. An experience modification factor is a comparison between your actual losses and the average expected losses of employers using the same class codes. Michigan experience modification factors are promulgated by CAOM.
Employers that are permitted to exclude themselves from coverage must file Form BWC 337 with the Bureau of Workers' Disability Compensation. Exclusion only applies to employers who only employ people that can be excluded under the state Act. This is the only way an employer can comply with the insurance laws of Michigan without purchasing a workers' comp policy. Once filed, the excluded employees are not allowed to receive workers compensation benefits.
General Contractors and Certificates of Insurance
General contractors can require Certificates of Insurance from all sub-contractors performing work on a job. They are not required to accept a state exclusion form. General contractors may be held responsible for work-related claims when sub-contractors do not have coverage or the proper exclusion form on file with the Bureau. They also have the right to sue an uninsured subcontractor for reimbursement of all compensation paid to the subcontractor.
To request more information on exclusion forms contact one of our Michigan Specialists at 888-611-7467, or call the Michigan Workers' Compensation Agency at 517-322-1195.
Employers who fail to purchase workers' comp coverage in Michigan may be sued for civil damages by an injured employee. The Michigan Workers' Compensation Agency is responsible for enforcing the states' Workers Disability Compensation Act, and has the authority to order companies to cease employing individuals until coverage is obtained. Additionally, employers may be subject to a $1,000.00 fine for each day they are uninsured. They are also subject to no less than 30 days in jail up to 6 months.
In the event of bankruptcies, either the Self-Insurers' Security Fund or the Guarantee Fund will assume responsibility for making payments to injured workers in Michigan.
Employers are permitted to require injured workers to return to work doing a reasonable job that can be performed by the employee. The employee must accept the job or be subject to the loss of benefits. If the job pays less than what the employee was making prior to the claim, the employee will receive benefits from the insurance company based on the difference in wage. Employers are not required to offer a job to injured workers.
Michigan law allows the employer to initially choose the doctor for medical treatment of injured workers. After the first 10 days of treatment the employee is allowed to choose another doctor of their choice. Employees must notify the employer and insurance company of the change.
MI “strongly encourages” insurers to provide policyholders 60-day grace period to pay premium to avoid cancellation. Insurers may defer payment without interest, extend due dates, waive late/reinstatement fees. Also encourages the use of a payment plan at the end of the grace period for the overdue premium, in lieu of a balloon-type bill. Should also work with policyholders to change policy options given changed circumstances (e.g., modify types of coverage or deductible amounts). Insurers are asked to adjust claim filing deadlines and waive sworn statement requirements to accommodate insureds who may have trouble with them (e.g., if insured is unaware of loss or unable to provide timely notice). Insurers should consider extending coverage for living expenses, rentals, and loss of use if property repairs/replacements are delayed due to COVID-19. MI also asks insurers providing any of the relief described above to submit the plan to the DIFS. The Compliance department will handle submitting this plan as needed – please refer to this item in the “Regulator Requests” tab for further details about the submission.
Discretionary order in effect from 04/16/2020 until 60 days after the emergency is lifted. Applies to all lines of coverage and all insurane companies.
Unless proven otherwise, a first response employee suffers a personal injury that arises out of and in the course of employment if the first response employee is diagnosed with COVID-19, whether by a physician or as a result of a test. Denial of a claim by a first response employee diagnosed with COVID-19 violates the worker’s disability compensation act.
Effective as state law from 03/30/2020 until 09/30/2020.
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Coverage Facts
Workers' comp coverage is required.
Private carriers are allowed.
Self-insurance is permitted.
Assigned coverage is written through Michigan Workers' Compensation Placement Facility.
State Fund coverage is available.
Individual waivers are allowed.
Small deductible plans are permitted.
Extraterritorial Provisions are in effect but the duration is not specific.
There is no state reciprocity.
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Employers liability insurance is an additional layer of coverage included as part of a workers' compensation insurance policy. Employers Liability is known as Part 2 of the policy. It adds two additional coverages for employers:
Employers Legal Liability and Legal Defense Costs
In today's world, there are a variety of reasons employees and third-parties sue employers for damages. Here a some common types covered by employers liability insurance:
Third Party Lawsuits
Your employee sues another party that may have contributed to the injury, In turn, the third party sues your business.
Consequential Bodily Injury
Another party or individual is injured while providing care for the injured employee.
Dual Capacity Legal Action
An employee files a claim but also attempts to sue the employer for being responsible in other ways outside of the employment relationship.
Loss of Consortium
A spouse sues for damages caused by the loss of companionship or relations.
Employers Liability coverage is not included with coverage in the four monopolistic states. Employers in these states can endorse this coverage onto their General Liability policy. That coverage is commonly known as Stop Gap Coverage.
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