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I am a sole proprietor ... Do I need workers compensation insurance coverage?

Most sole proprietors are a one-person team and the owner of the business is not considered an employee.  However, this is not always the case and sometimes there is a small crew. A sole proprietor is not required by the state of Michigan to carry workers compensation insurance unless they are paying at least one full-time or three part-time employees to do their job. These employees can be paid either via W2 or 1099 to be covered. If the employees who are 1099’ed carry their own workers compensation coverage on themselves and work for other people doing similar jobs they do not have to be picked up as employees under the Sole Proprietor for Workers Compensation coverage as they would be considered subcontractors.

When working with a general contractor, they usually require workers compensation even on a true sole proprietorship with no employees. The State of Michigan has an official Workers Compensation exclusion form that can be completed and stamped to show clients and contractors that you are excluded from workers compensation coverage needed in the State of Michigan. To start the process of this exclusion you can call the Compliance & Employer Records Division at 517-284-8922. If the requirement is still made by the general contractor there are some carriers that will write a workers compensation policy for a sole proprietor without employees however it would not award any coverage to the owner/business.

To confirm whether you may need workers compensation coverage for your business, we recommend connecting with a Commercial Lines Account Manager at Ieuter Insurance Group to review your coverage questions.

For all your insurance needs, visit us at

Ieuter Insurance Group - 414 Townsend St Midland MI 48640

(989) 487-1758

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Photo by Daniel McCullough on Unsplash