Most conversations about high-net-worth insurance in Michigan stop at the house — rebuild cost, scheduled jewelry, a bigger umbrella. Those matter, and we cover them in our guide to high-value home insurance in Michigan. This post is about everything else: the eight exposures that sit outside the dwelling, where standard personal policies are silent or expressly excluded, and where Michigan law makes the gap wider than clients assume.
1. The person who mows the lawn may be a statutory employee
Michigan requires workers' compensation coverage for household domestic workers, and the threshold is lower than most families realize. Under MCL 418.118(2), a private employer is exempt only for a household domestic servant employed less than 35 hours per week for 13 weeks or longer during the preceding 52 weeks. Cross that line and coverage is mandatory. The Michigan Workers' Disability Compensation Agency states the rule the same way.
Two details make this a genuine Michigan trap:
- The statutory definition is broad. MCL 418.118(3) defines a household domestic as "a person who engages in work or activity relating to the operation of a household and its surroundings, whether or not he resides therein." That reaches the groundskeeper, the caretaker, the dock crew — not just indoor staff.
- Seasonal does not mean exempt. The test looks at hours during the preceding 52 weeks. A caretaker working 40 hours a week at a lake house from Memorial Day through Labor Day is roughly 14 weeks — past the 13-week threshold. Michigan has more freshwater shoreline than any other state and 11,000 inland lakes; seasonal property staff is common here, and so is this oversight.
Your homeowners policy does not fill this. The HO-3 excludes bodily injury to any person eligible to receive benefits required to be provided by an insured under a workers' compensation law. Once the Michigan threshold is met, homeowners liability is excluded outright. All the policy gives a residence employee is Coverage F medical payments — commonly $1,000 per person, with no wage replacement and no disability benefits.
Going uninsured is not a paperwork problem. Michigan's WDCA notes the injured worker can sue the employer directly in civil court, the agency can obtain an order barring the employer from employing anyone, and the criminal penalty is a $1,000 fine or 30 days to 6 months imprisonment — with each uninsured day treated as a separate offense.
While you are at it: Michigan unemployment liability attaches once a household pays $1,000 cash in a calendar quarter, and the IRS requires Social Security and Medicare withholding at $3,000 in cash wages to any one household employee in 2026.
2. Employment claims from household staff
If you employ people at home, you can be sued the way any employer can — wrongful termination, harassment, unpaid wages. None of that is bodily injury or property damage, so the homeowners policy has nothing to say about it. Even the optional Personal Injury endorsement excludes injury "sustained by any person as a result of an offense directly or indirectly related to the employment of this person by an insured," and the ISO personal umbrella carries the same carve-out.
The fix is a personal employment practices liability endorsement, which several private-client carriers offer specifically for families employing nannies, housekeepers or gardeners. Limits are modest by commercial standards — commonly $250,000 to $500,000 per occurrence — and eligibility usually requires a minimum excess liability limit and a cap on staff count. Ask what your carrier's current eligibility rules are; they change.
3. Family cyber and fraud — where the actual dollars are lost
This is no longer speculative. The FBI's Internet Crime Complaint Center recorded 22,191 complaints from Michigan in 2025 with $381,068,131 in reported losses — 14th in the nation by complaint count. Nationally, business email compromise accounted for $3.05 billion and the real-estate crime category $275.1 million. The IC3 report's own case study describes a senior citizen attempting a property closing who received fraudulent wire instructions and sent over $1.3 million.
That is the scenario that should worry a Michigan family: a lake-house purchase, a downsizing sale, a construction draw. Wire fraud at closing is not a home burglary, and a standard homeowners policy does not respond to it.
Private-client carriers now offer personal cyber and fraud endorsements covering cyber extortion and ransomware, fraudulent funds transfer and social engineering, forgery, data restoration and system recovery, breach response, and cyberbullying. Limits commonly run from $50,000 to $500,000 depending on the coverage part, with some carriers offering fraud limits up to $1,000,000 or $2,000,000 for families with no prior incident. Deductibles are small relative to the exposure. If your family regularly moves large sums by wire, this is the highest expected-value endorsement on this page.
4. That nonprofit board seat is not as protected as you think
Serving on a Michigan nonprofit board — a school, a hospital foundation, a conservancy, a club — is one of the most common uninsured exposures among successful families. Three layers of assumed protection each have real holes.
- Your personal umbrella. The ISO form excludes liability arising out of an act or omission as an officer or director, then carves back the exclusion when the organization is not-for-profit and you receive no compensation beyond expense reimbursement. Useful — but the umbrella still only pays damages for bodily injury, personal injury or property damage. Most real nonprofit board claims are none of those: mismanagement, breach of fiduciary duty, employment claims by staff, regulatory action.
- Michigan's nonprofit statute. MCL 450.2209 is permissive, not automatic — it authorizes a provision in the articles of incorporation limiting director liability. If the organization never adopted one, there is no protection. Where it exists, it limits liability only to the corporation, its shareholders or its members — it does nothing about a claim by an injured program participant, a donor, a terminated employee or a regulator. The separate liability-assumption provision applies only to 501(c)(3) organizations, only to volunteer directors, and only for good-faith performance.
- The federal Volunteer Protection Act of 1997. Immunity requires all four statutory conditions, and two of them bite hard: it does not apply to willful or criminal misconduct, gross negligence or reckless misconduct, and it does not apply to harm caused while operating a motor vehicle, vessel or aircraft. Driving kids to a fundraiser or towing the club boat is outside it entirely. The Act also expressly does not stop the nonprofit itself from suing its own volunteer.
And immunity is not a defense budget. As Travelers puts it, charitable immunity laws may protect a volunteer from an adverse judgment but do not protect them from incurring substantial defense costs personally — with defense counsel commonly $200 to $1,000 an hour. Before you accept a board seat, ask the organization for its D&O certificate and check whether your own excess liability carrier offers a not-for-profit board extension.
5. Excess uninsured/underinsured motorist — the umbrella gap
This one is specific to Michigan and it is a large hole.
The ISO personal umbrella states that it does not provide uninsured motorists coverage, underinsured motorists coverage, or any similar coverage unless the policy is endorsed to provide it. It is an election, not a default. Some markets offer it at high limits; at least one major umbrella market provides no UM/UIM at all, not even optionally.
Now layer on Michigan facts. UM and UIM are optional coverages in Michigan — they are not among the three mandatory coverages (PIP, Property Protection Insurance, and residual bodily injury/property damage liability). DIFS notes UM/UIM is usually sold at limits of $20,000 per person and $40,000 per accident. And the lowest bodily injury limits a Michigan driver may legally select are $50,000 per person / $100,000 per accident.
Put those together. A client with a $10 million umbrella, a stepped-down PIP medical limit, and a default 20/40 uninsured motorist limit is struck by a driver carrying 50/100. The umbrella is a third-party instrument — it protects the client's assets from claims made against them. It does nothing for their own catastrophic injury. There is no mechanism in that structure to reach the loss.
The fix is a two-line conversation: raise UM/UIM on the underlying auto policy, and endorse excess UM/UIM onto the umbrella. If you have reduced your PIP medical level — see our guide to Michigan PIP coverage levels — this matters considerably more than it used to.
6. The boat
Michigan had 581,089 registered recreational vessels in 2024, per the Coast Guard. Homeowners policies handle almost none of them well.
- Property: a $1,500 special limit. Coverage C caps watercraft of all types — including trailers, furnishings, equipment and outboard motors — at $1,500. That is the entire property grant for an unscheduled boat.
- Liability: excluded above modest thresholds. The HO-3 excludes watercraft liability for owned inboard or inboard-outdrive engines over 50 horsepower, owned outboard motors over 25 horsepower, and sailing vessels 26 feet or longer.
- The umbrella follows the underlying. If the homeowners policy excludes the boat, so does the umbrella — umbrellas cover watercraft only where the underlying insurance does.
A real watercraft or yacht policy adds what no homeowners form can: agreed value, hull coverage, wreck removal, defined navigational limits, uninsured and underinsured boater coverage, and — the one most Michigan owners miss — Jones Act protection for paid crew. Hiring a captain or a summer deckhand converts a recreational boat into a vessel with maritime employment exposure. Larger carriers treat 36 feet as the threshold for a yacht form.
Michigan does not require boat liability insurance, which is precisely why uninsured boater coverage matters here: the person who hits you on the lake may carry nothing.
7. The trust that owns the cottage
Estate planning and insurance policies drift apart constantly. A family retitles the lake house into a revocable trust or an LLC, the attorney records the deed, and nobody tells the insurance agent. The policy still names two individuals.
IRMI states the consequence directly: neither the trust nor the trustee is an insured under the homeowners policy definitions, so the trust's ownership of the home and personal property is completely uninsured. The insurer's argument at claim time is that the named insured lacks an insurable interest in property owned by someone else. The liability side is worse than the property side — umbrellas typically lack automatic coverage for trusts and trustees, so a liability claim against the trust may be neither defended nor covered.
The fix is to list all parties as co-named insureds on both the underlying and the umbrella policies. ISO's Residence Held in Trust endorsement (current edition HO 06 15) adds the trust and trustees to the definition of insured, but it is not a cure-all: Coverages A and B extend to the trust and trustees while Coverages C through F apply only to parties listed in the schedule, and professional liability for trustees is excluded. Many private-client carriers use their own broader wording.
For an LLC-titled property the same insurable-interest logic applies, and the practical answer is naming the LLC as a named insured — or writing the risk on a commercial or dwelling form — rather than simply adding it as an additional insured. If you have moved a property into a trust or LLC in the last few years, this is worth a five-minute check today.
8. Fine art, in transit and abroad
A correction worth making, because it is widely misstated: ISO's scheduled personal property endorsement covers listed property, including fine arts, worldwide. Territory is not the problem. Three other things are:
- Breakage is largely excluded. Under the standard scheduling endorsement, breakage of art glass windows, glassware, statues, marble, bric-a-brac, porcelains and similar fragile articles is excluded except from named causes such as fire, theft, collision or windstorm. Breakage coverage is a separately rated class.
- There is a packing condition. The insured must agree that covered property will be handled only by competent packers. A DIY move, an unvetted shipper or a gallery-arranged crate can put a transit claim in dispute.
- Newly acquired items have short clocks. Fine art: 25 percent of the fine-arts limit, reportable within 90 days. Jewelry, furs, cameras and musical instruments: the lesser of 25 percent of that class's limit or $10,000, reportable within 30 days. A single buying trip can blow through both.
Private-client valuable articles coverage differs in ways that matter: worldwide all-risk terms, breakage of fragile items included, mysterious disappearance covered (standard homeowners forms exclude it), agreed value settlement, and market-appreciation provisions paying up to 150 percent of the itemized amount. Most fine art losses carry no deductible. See our post on scheduling jewelry, art and valuables in Michigan for how the scheduling process itself works.
Two more, briefly
Aircraft. The homeowners policy states flatly that it does not cover aircraft liability, and the personal umbrella excludes it broadly — including entrustment and vicarious liability, which reaches an owner who lets someone else fly. Owners, fractional-share owners and renter pilots all need separate aviation coverage; non-owned aircraft liability is its own product line.
Kidnap, ransom and extortion. Personal K&R exists as a standalone product covering ransom and extortion payments, ransom delivery, hijacking, wrongful detention, and short-duration "express" kidnapping — with the real value sitting in the crisis-response firm it funds rather than the reimbursement. Carriers market it to families traveling internationally and, notably, to students studying abroad. Limits are generally not published, and disclosure of a K&R limit can itself void the policy, so treat any quoted range with suspicion.
The bottom line
None of these eight are exotic. A caretaker at the lake house, a wire transfer at a closing, a seat on a hospital foundation board, a boat with a hired hand, a deed moved into a trust — these are ordinary facts of an accomplished Michigan family's life, and each one sits in a place where a standard personal policy is silent or explicitly excluded. The failure mode is always the same: nobody discovers the gap until there is a claim in it.
J. Jacobs & Associates has been an independent agency in Lake Orion since 1981, and we place private-client coverage with carriers built for it. Bring us your current declarations pages, a list of who works at your properties, and how your real estate is titled, and we will map the gaps against what you actually own. Start with high-net-worth insurance and personal umbrella coverage, then request a free review or call (248) 693-6455.
Frequently Asked Questions
Does Michigan require workers' compensation for a nanny or housekeeper?
Yes, above a threshold. Under MCL 418.118(2), coverage is required for a household domestic servant employed 35 or more hours per week for 13 weeks or longer during the preceding 52 weeks. The statutory definition includes work relating to the operation of a household "and its surroundings," so it reaches groundskeepers and caretakers. A full-time seasonal caretaker working Memorial Day through Labor Day generally crosses the 13-week threshold.
Does my homeowners policy cover an injured household employee?
Not meaningfully. The HO-3 excludes bodily injury to any person eligible to receive benefits required under a workers' compensation law, so once Michigan's threshold is met the homeowners liability coverage is excluded. The policy provides only Coverage F medical payments — commonly $1,000 per person — with no wage replacement or disability benefits.
Does a personal umbrella cover me for serving on a nonprofit board?
Partially, at best. The ISO personal umbrella excludes liability as an officer or director but carves back that exclusion for uncompensated not-for-profit service. However, the umbrella still pays only damages for bodily injury, personal injury or property damage — and most nonprofit board claims allege mismanagement, breach of fiduciary duty, employment matters or regulatory violations, none of which are covered. Ask the organization for its D&O certificate and ask your carrier about a not-for-profit board extension.
Does a personal umbrella include uninsured motorist coverage?
Not automatically. The ISO personal umbrella states it does not provide uninsured or underinsured motorists coverage unless the policy is endorsed to provide it. This matters more in Michigan than in most states, because UM/UIM is optional here, DIFS notes it is usually sold at only $20,000/$40,000 limits, and the lowest bodily injury limits a Michigan driver may select are $50,000/$100,000.
Is my boat covered by my Michigan homeowners policy?
Barely. Coverage C caps watercraft of all types — including trailers, equipment and outboard motors — at a $1,500 special limit. Liability is excluded for owned inboard or inboard-outdrive engines over 50 horsepower, owned outboard motors over 25 horsepower, and sailing vessels 26 feet or longer. The personal umbrella covers watercraft only where the underlying policy does, so an excluded boat is excluded at every layer.
What happens if my house is owned by a trust but the policy names me?
The trust may have no coverage at all. Neither the trust nor the trustee is an insured under standard homeowners policy definitions, so an insurer can argue the named insured lacks an insurable interest in trust-owned property. The liability exposure is worse, because umbrellas typically lack automatic coverage for trusts and trustees. The correction is to list all parties as co-named insureds on both the underlying and umbrella policies.