Construction Claim Rules in Michigan

Statutory interest rate

3.959% / year (as of July 1, 2026, resets twice yearly)

1% plus the average 5-year U.S. Treasury note yield, recalculated every Jan 1 and Jul 1 under MCL 600.6013(8). A written contract or instrument specifying its own rate, filed on or after July 1, 2002, may instead cap the rate at the lesser of 13% (compounded annually) or the contract rate under MCL 600.6013(7); check which applies.

Compounding: Compounded annually

Citation: MCL 600.6013(8); written-instrument cap at MCL 600.6013(7)

Source: https://www.michigan.gov/taxes/interest-rates-for-money-judgments

Last checked: 2026-08-23

The 3.959% figure is the rate for the period beginning July 1, 2026, taken from the Department of Treasury's judgment interest page. The next reset is January 1, 2027. Where a written instrument dated on or after July 1, 2002 sets its own rate, the cap in MCL 600.6013(7) applies instead.

Accrual: breach of contract claim

Notable outlier: not date of breach, from the date the lawsuit (complaint) was filed

MCL 600.6013 calculates interest on a money judgment, including one on a written instrument such as a construction contract, from the date the complaint was filed through satisfaction of the judgment. It does not run from the date of breach.

Citation: MCL 600.6013(7) (complaints filed after July 1, 2002)

Source: https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-600-6013

The statute has several subsections tied to different filing-date windows (rates and mechanics changed over the years); confirm which subsection applies based on when your complaint was or will be filed.

Accrual: property damage / tort claim

Same rule as contract claims: not date of loss, from the date the lawsuit was filed

For actions not based on a written instrument, including property-damage tort claims, MCL 600.6013(8) also calculates interest from the date the complaint was filed, not the date of loss.

Citation: MCL 600.6013(8) (complaints filed after January 1, 1987)

Source: https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-600-6013

Like Texas, Michigan ties its interest start date to when suit is filed rather than to when the loss or breach occurred, so filing promptly directly affects how much interest accrues.

Actual Cash Value rule

Replacement cost less depreciation (NOT the broad evidence rule). The Michigan Supreme Court superseded the older broad-evidence approach in 1992.

In Smith v. Michigan Basic Property Insurance Association the Michigan Supreme Court held that actual cash value means replacement cost less depreciation. That superseded the broad evidence approach Michigan courts had used under Davis v. National American Ins. Co. (1977). Salesin v. State Farm applied the Smith standard.

Citation: Smith v. Michigan Basic Property Ins. Ass'n, 441 Mich. 181, 490 N.W.2d 864 (Mich. 1992); Salesin v. State Farm Fire & Cas. Co., 229 Mich. App. 346 (1998).

Source: https://law.justia.com/cases/michigan/supreme-court/1992/90632-5.html

An earlier version of this entry described Michigan as a broad evidence rule state on the strength of the 1977 Davis decision. Smith replaced that rule in 1992.

ACV statute or regulation

Michigan regulates depreciation of labor and other nontangible items through a Department of Insurance and Financial Services (DIFS) bulletin issued under its unfair-policy-provision authority, not a standalone statute.

DIFS Bulletin 2024-26-INS (superseding an earlier Bulletin 2024-18-INS) states that personal lines homeowners and dwelling insurers may not depreciate nontangible items, defined as labor, taxes, fees and overhead and profit, in standard ACV coverage. An insurer that wants to depreciate those items must offer it only as an optional, separately priced standalone endorsement that identifies the nontangible items subject to depreciation, with the base policy premium reduced to reflect the narrower coverage; any other nonphysical item an insurer wants to depreciate requires prior DIFS approval. The bulletin cites MCL 500.2236(5), which bars policy language that is inconsistent, ambiguous or misleading or that unreasonably or deceptively affects the risk, as its legal basis. It applies to personal lines homeowners or dwelling policies issued or renewed on or after July 1, 2025.

Citation: DIFS Bulletin 2024-26-INS, issued under MCL 500.2236(5)

Source: https://www.michigan.gov/difs/-/media/Project/Websites/difs/Bulletins/2024/Bulletin_2024-26-INS.pdf

This is regulatory guidance issued by DIFS under its existing statutory unfair-policy-provision authority rather than a standalone statute enacted by the legislature; it applies to personal lines homeowners and dwelling policies as scoped above.

Recoverable depreciation holdback

No Michigan statute sets a deadline or procedure for paying withheld recoverable depreciation, so the policy terms control.

MCL 500.1605 defines actual cash value (replacement cost minus depreciation and obsolescence) and MCL 500.2117 addresses replacement-cost-vs-market-value disclosure for nonrenewal purposes, but no provision specifically sets a deadline or procedure for releasing recoverable depreciation once repairs are complete. This appears to be governed by individual policy terms rather than statute.

Source: https://www.legislature.mi.gov/Laws/MCL?objectName=MCL-500-1605

“No damages for delay” clause enforceability

Enforceable, but not where the parties didn't contemplate the extent of delay actually experienced

A Michigan appellate court held that a no-damages-for-delay provision doesn't apply where the parties didn't contemplate the extent of the delay at the time of contracting. In the case establishing this, a subcontractor's work stretched from an originally-planned 6 months to 15 months because of unforeseen site conditions and scope changes; the court held the clause didn't bar the subcontractor's delay claim because the parties hadn't anticipated delay of that magnitude when they signed.

Citation: Phoenix Contractors, Inc. v. Gen. Motors Corp., 355 N.W.2d 673, 676 (Mich. Ct. App. 1984); Macomb Mech. v. Lasalle Grp., No. 319357, 2015 WL 1880189 (Mich. Ct. App. Apr. 23, 2015).

Source: https://50-state.watttieder.com/states/michigan/

Phoenix Contractors is the foundational Michigan decision and sets out four exceptions: delay not contemplated, abandonment, bad faith and active interference. Macomb Mechanical applied them in 2015.

Construction contract filing deadline

6 years for breach of contract generally; separate 6-year/10-year cap for claims against a builder

Michigan's general limitations period for breach of contract damages is six years from accrual. A separate statute for licensed architects, professional engineers, contractors and land surveyors requires suit within six years of occupancy, use or acceptance of the completed improvement, or one year after a defect is discovered or should have been discovered, whichever is later, but never more than ten years after occupancy, use or acceptance. Two deadlines sit in front of that one on most construction claims. A mechanic's lien and a payment bond claim each run on their own, far shorter clock, counted from last furnishing rather than from breach and missing either one removes the security while leaving the contract claim alive but unsecured. Check those dates first. Accrual is the other half of the question: the period runs from breach, which on a payment dispute is usually the date payment came due rather than the date the work was done.

Citation: MCL 600.5807; MCL 600.5839

Source: https://law.justia.com/codes/michigan/2011/chapter600/act236of1961/236-1961-58/section600-5839

The 600.5839 claims-against-builder period is aimed at injury/defect claims against the specific licensed professionals it names, not necessarily every ordinary payment dispute; confirm which statute actually governs a given claim.

State unemployment insurance (SUTA)

New employers pay 2.7% for their first two years of liability, with rates increasing in years three through five. Experienced employers range from 0.06% to 10.30%. 2026 taxable wage base is $9,000 for employers in good standing, $9,500 for delinquent employers.

Michigan's Unemployment Insurance Agency assigns new employers a 2.7% rate for their first and second years of liability, with the rate increasing in years three through five as additional experience-based components (CBC, ABC, NBC) phase in. Established employers' rates, once fully experience-rated, range from 0.06% to 10.30%. The taxable wage base applies to the first portion of each employee's gross wages each calendar year.

Citation: Michigan Department of Labor and Economic Opportunity (LEO), Unemployment Insurance Agency, Unemployment Tax Rate

Source: https://www.michigan.gov/leo/bureaus-agencies/uia/employers/forms/accordion/taxable-wage-base

Last checked: 2026-08-26

Both wage base figures are correct and apply to different employers. $9,000 applies where the employer has filed all required quarterly reports and has no unpaid balance, which covers most employers. $9,500 applies to delinquent employers.

Workers' compensation rating

Michigan does not use NCCI directly. Rates are set through the Compensation Advisory Organization of Michigan (CAOM), the state's own advisory and data organization, which also administers the assigned-risk placement facility.

Michigan workers' compensation rating is handled by the Compensation Advisory Organization of Michigan (CAOM) rather than NCCI. CAOM collects policy, statistical and financial data from carriers, administers experience rating (including modification calculations) and manages the Michigan Workers' Compensation Placement Facility, the state's assigned-risk (residual market) mechanism for employers who cannot obtain coverage voluntarily.

Citation: Compensation Advisory Organization of Michigan (CAOM), About Us

Source: https://caom.com/About-Us

The CAOM page confirms its rating, data-collection and assigned-risk functions but does not itself state explicitly that it operates independently of NCCI; that characterization is based on CAOM being the recognized advisory organization of record for Michigan rather than NCCI.

Prevailing wage law

Michigan has a state prevailing wage law again. The Prevailing Wages on State Projects Act took effect 13 February 2024 after the 2018 repeal.

Michigan's original 1965 prevailing wage act was repealed in 2018. The Prevailing Wages on State Projects Act, 2023 PA 10, restored the requirement and took effect on 13 February 2024, codified at MCL 408.1101 to 408.1126 and administered by the Department of Labor and Economic Opportunity. It covers new construction, alteration, repair, installation, painting, decorating, completion, demolition, conditioning, reconditioning or improvement of public buildings, schools, works, bridges, highways or roads authorised by a contracting agent. The act carries no minimum contract value. It does not reach contracts entered into or bids made before its effective date, or a project paid for in whole or in part from a school millage authorised before that date. A 2024 amendment, effective 2 April 2025, added a state project registration requirement for contractors and subcontractors.

Citation: MCL 408.1101 to 408.1126 (2023 PA 10, eff. Feb. 13, 2024; am. 2024 PA 110, eff. Apr. 2, 2025)

Source: https://www.legislature.mi.gov/documents/mcl/pdf/mcl-408-1109.pdf

Registration matters in practice: since April 2025 a contractor or subcontractor must hold a state project registration to work on a state project and a bid must include the registration for the contractor and for each subcontractor already selected.

Comparative / contributory negligence rule

Modified comparative fault, but the bar is partial: above 50% fault non-economic damages are barred entirely, while economic damages remain recoverable, reduced by the worker's share

Section 600.2959 reduces damages in proportion to the injured person's comparative fault. A worker exactly 50% at fault recovers half of everything. Above that threshold the statute splits the two categories rather than closing the claim: the court still reduces economic damages by the percentage of fault and non-economic damages are not awarded at all. So a worker 60% at fault on a Michigan site still recovers 40% of medical costs, lost wages and lost earning capacity and nothing for pain and suffering.

The threshold is also not a bare 50% line. The statute compares the injured person's fault against the aggregate fault of the other person or persons, whether or not they are parties to the action. On a multi-employer site that matters: fault allocated to a subcontractor who was never joined still counts on the other side of the comparison rather than against the worker.

Citation: Mich. Comp. Laws § 600.2959 (damages reduced as provided in §§ 600.6306, 600.6306a)

Source: https://codes.findlaw.com/mi/chapter-600-revised-judicature-act-of-1961/mi-comp-laws-600-2959/

Verified against: statute text of Mich. Comp. Laws 600.2959

Non-economic damages cap

Capped in some actions only, see detail

Michigan caps non-economic damages in PRODUCT LIABILITY actions only, at $596,400 for 2026, with a higher tier where the defect caused death or permanent loss of a vital bodily function. Adjusted each calendar year by the state treasurer to track the medical malpractice cap at M.C.L. § 600.1483. Ordinary negligence claims against a general contractor, owner or subcontractor are NOT capped. Note also Beaubien v. Trivedi, in which the Michigan Supreme Court has been certified questions on the constitutionality of § 1483.

Citation: M.C.L.A. § 600.2946a; Michigan Dept. of Treasury notice, 30 Jan 2026

OSHA plan

MIOSHA: full state plan, private + public sector

Michigan operates MIOSHA (Michigan Occupational Safety and Health Act), a full OSHA-approved state plan covering both private and public-sector employers. A state plan must be at least as effective as federal OSHA and may set stricter standards, so check the state rule before assuming the federal text applies. It also covers state and local government employees, which federal OSHA does not, so a public works injury is inside the state agency's jurisdiction. Citations are issued by the state agency and contested before the state's own review body rather than the federal commission, which changes where the file lives when you go looking for it. Reporting deadlines follow the federal rule: a work-related fatality within 8 hours, an inpatient hospitalisation, amputation or loss of an eye within 24 hours. For a construction claim the inspection file matters more than the citation: photographs, measurements, witness statements and the inspector's narrative are usually obtainable and are often the best contemporaneous record of the site.

Citation: 29 U.S.C. § 667; Mich. Comp. Laws § 408.1001 et seq.

Source: https://www.osha.gov/stateplans/mi

Weight of an OSHA violation in a negligence case

OSHA and MIOSHA violations are evidence of negligence in Michigan, not negligence per se

The Michigan Court of Appeals has held that violations of federal OSHA standards and Michigan's own MIOSHA standards are evidence of negligence, because the purposes of those standards overlap with those underlying tort law. Michigan courts also apply MIOSHA and OSHA standards to establish the duty element in construction cases, including a duty to inspect for and remove slip and trip hazards in walkways.

Citation: Sanderson v. Cahill Construction Co., No. 294939, 2011 Mich. App. LEXIS 611 (Apr. 5, 2011); Ghaffari v. Turner Construction Co. (Mich. Ct. App.)

Source: http://www.michbar.org/opinions/appeals/2011/040511/48505.pdf

Third-party contribution against the employer

Statutory-employer status is worth checking in Michigan, but the bigger question on a construction site is the common work area doctrine.

Third-party claims otherwise involve premises liability, control, notice and product defect against owners, contractors, manufacturers and drivers. See the distinctive doctrine entry below for the four-element common work area test that governs general contractor liability.

Citation: Mich. Comp. Laws §§418.101 et seq.; Ormsby v. Capital Welding, Inc., 471 Mich. 45 (2004).

Source: https://www.courtlistener.com/opinion/848695/ormsby-v-capital-welding-inc/

Injury-severity gate on contribution claims

Exclusivity has a narrow intentional-tort exception under MCL §418.131(1)(b).

Mich. Comp. Laws §§ 418.101 et seq. protect the employer. The intentional-tort exception in § 418.131(1)(b) requires a deliberate act with specific intent to injure, which Travis v. Dreis & Krump defines narrowly. In practice exclusivity takes the direct employer off the tort table entirely, whatever the OSHA file shows. The claim runs against the other parties on the site: the general contractor, the owner, another subcontractor, an equipment manufacturer. The employer or its carrier then asserts a lien against whatever the worker recovers from those parties, so the figure the worker actually keeps is the recovery less the lien, the fee and the costs. Whether the lien is reduced for the cost of obtaining the recovery is a separate state question worth asking early, because it moves the net more than most people expect.

Citation: Mich. Comp. Laws §418.131(1)(b); Travis v. Dreis & Krump Mfg. Co., 453 Mich. 149, 551 N.W.2d 132 (1996).

Source: https://www.courtlistener.com/opinion/848695/ormsby-v-capital-welding-inc/

Distinctive state doctrine

Common work area doctrine: a general contractor can be liable for injuries in areas shared by several subcontractors' employees, even though it did not employ the injured worker

Funk v. General Motors Corp., 392 Mich 91, 220 NW2d 641 (1974) created the common-work-area doctrine. The Michigan Supreme Court narrowed it in Ormsby v. Capital Welding, Inc., 471 Mich 45, 57, 684 NW2d 320 (2004), which set the current 4-element test: the GC (1) failed to take reasonable steps within its supervisory and coordinating authority (2) to guard against readily observable and avoidable dangers (3) that created a high degree of risk to a significant number of workers (4) in a common work area. Failure to establish any one element defeats the claim. Funk was also overruled in part on other grounds by Hardy v. Monsanto Enviro-Chem Systems, Inc., 414 Mich 29, 70-71, 323 NW2d 270 (1982), though the common-work-area doctrine itself survived and was refined, not eliminated, by Ormsby.

Citation: Funk v. General Motors Corp., 392 Mich 91, 220 NW2d 641 (1974); Ormsby v. Capital Welding, Inc., 471 Mich 45, 684 NW2d 320 (2004).

Source: https://www.courts.michigan.gov/49dace/siteassets/case-documents/uploads/opinions/final/coa/20190124_c341193_35_341193.opn.pdf