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Michigan sheet metal and pattern shop insurance combines workers' compensation classified correctly for shop and field work, products liability for the components you make, property coverage for customer-owned patterns and tooling, equipment breakdown for press brakes, lasers and CNC machines, and an umbrella. For an established fabrication or pattern shop, liability should start at $1 million per occurrence and $1 million aggregate.
The short version: In Michigan's workers' comp manual, a sheet metal shop that does any installation work can have its entire shop payroll moved to a higher class. And the customer patterns and tooling sitting in your building are usually not covered at replacement value unless your property policy is written for them.
The class code rule that surprises sheet metal shops
Michigan rates workers' comp under its own manual, maintained by the Compensation Advisory Organization of Michigan. For sheet metal, the key text is in code 3066, Sheet Metal Work Shop: it applies only if the employer performs no installation or erection. If you do install, "those operations as well as the shop manufacturing work" go to code 5538.
That is not just your field crew. On Michigan's 2026 assigned-risk rates, 3066 is 1.733 per $100 of payroll and 5538 is 3.412. For a shop with $1.5 million of shop payroll, that difference is roughly $25,000 of manual premium before any experience modification. On the 2027 rates (3066 at 1.809, 5538 at 3.107), effective for policies starting January 1, the gap is about $19,500. Voluntary carriers' rates are different, but the rule is the rule. Other splits to know:
- HVAC duct installation is code 5550, not 5538. A duct shop that installs should confirm with us how its shop payroll is classified. See our HVAC and mechanical contractor post.
- "Sheet metal" means 1/4 inch or thinner. Shop work on heavier stock generally goes to code 3040 for non-structural fabrication.
- Pattern making is code 2790, covering wood, plastic and metal patterns and prototypes. Casting the mold for a metal pattern is rated separately as foundry work, and plaster patterns are 4036.
Before you take that first install job, call us. The decision may be worth it, but it should be made on purpose.
Press brakes, shears and amputations
Federal OSHA's National Emphasis Program on amputations in manufacturing, renewed in June 2025, targets sheet metal work and the miscellaneous fabricated-metal industry that includes pattern shops. Michigan runs its own program and must be at least as effective.
One Michigan detail: MIOSHA's power press standards expressly exclude press brakes. Press brakes fall under MIOSHA's general provisions instead, which require operator protection whenever the point of operation opens more than a quarter inch, and allow hand tools alone only for runs of fewer than 25 pieces of a single bend. Shears, roll formers and benders have their own requirements under MIOSHA's metalworking machinery standard. Lockout programs, guarding and documented training are what underwriters ask about, and what keep your experience modification down.
Welding stainless steel produces hexavalent chromium; MIOSHA's limit is 5 micrograms per cubic meter, with an action level of 2.5. Wood and foam pattern shops have a combustible dust exposure under the current national standard, NFPA 660, which absorbed the older NFPA 652 and 664. Dust collectors are a property underwriting question as well as a safety one.
Customer patterns and tooling: who insures them?
Patterns are often worth far more than their depreciated value. Many cannot be remade without drawings that no longer exist. Yet they are routinely uninsured or insured the wrong way:
- In your shop, they are someone else's property. Your general liability policy excludes damage to property in your care, custody or control. On ISO's standard property form, others' property is covered only at your premises and is paid for the owner's account, and replacement cost does not apply to it unless your declarations add that extension.
- At the foundry, they may be nobody's. One Michigan foundry's posted terms put all insurance on patterns on the customer, disclaim liability for loss and allow the foundry to destroy patterns idle for more than 24 months. If you or your customer own patterns stored at a foundry, they are off premises and need to be scheduled.
- Valuation is the real problem. Keep a written inventory and agree on values in writing with your carrier and your customers.
Our post on auto parts supplier insurance explains how OEM terms treat customer-owned tooling, and machine shop and tool and die insurance covers the precision side of the shop.
Equipment, business income and products liability
- Equipment breakdown. Fiber lasers, CNC press brakes and turret punches are excluded from a standard property policy for mechanical breakdown. Equipment breakdown coverage adds them back, and business income should reflect real replacement lead times.
- Products liability. Michigan allows three years to sue after an injury and has no general product liability statute of repose; after ten years of use, the plaintiff only loses the benefit of legal presumptions. For sheet metal work you install in a building, Michigan's six-year construction statute of repose (MCL 600.5839) can apply. Your liability policy excludes recall costs and the cost of replacing your own defective parts.
- Completed operations. If you install, your liability policy is underwritten for contracting, with general contractors' additional insured and indemnity demands.
Frequently Asked Questions
What is the workers' comp class code for a sheet metal shop in Michigan?
Michigan's manual places sheet metal shop work under code 3066 if the employer does no installation or erection. If the employer does any installation, both the installation and the shop work are assigned to code 5538. HVAC duct installation is code 5550, and shop work on metal thicker than 1/4 inch is code 3040.
What is the class code for pattern making in Michigan?
Michigan's manual places industrial and engineering pattern making in wood, plastic or metal, including prototypes, under code 2790. Casting the mold for a metal pattern is rated separately, and plaster patterns fall under code 4036.
Who insures customer-owned patterns at a pattern shop or foundry?
It depends on the contract, and it is often nobody unless someone arranges it. A shop's general liability policy excludes property in its care, and standard property forms cover others' property only at the premises and not at replacement cost unless extended. Some Michigan foundries' terms put insurance on the pattern owner. Personal property of others has to be purchased with its own limit on the declarations. Schedule patterns and agree on values in writing.
Do MIOSHA power press rules apply to press brakes?
No. MIOSHA's power press standards exclude press brakes, which are covered by MIOSHA's general provisions instead. Those require operator protection when the point of operation opens more than a quarter inch, and allow hand tools alone only for fewer than 25 pieces of a single bend.
What limits should a Michigan fabrication shop carry?
We recommend at least $1 million per occurrence and $1 million aggregate on general and products liability, with a commercial umbrella above it. OEM and Tier 1 customers often require higher limits, additional insured status and coverage for the tooling they own.
The bottom line
A fabrication or pattern shop's insurance is decided by three things most quotes skip: whether any installation has changed your class codes, how the customer patterns and tooling on your floor are covered and valued, and whether equipment breakdown covers the machines your schedule depends on.
We work best with established Michigan sheet metal, fabrication and pattern shops — production payroll, CNC and press equipment, commercial or OEM customers, and a few years of loss runs. Send us your current declarations pages, your schedule of forms, a list of customer-owned patterns and tooling in your care and your last two loss runs, and we will show you where the gaps are before we talk about price. J. Jacobs & Associates has insured Michigan businesses for more than forty years, and as an independent agency we take your program to multiple preferred commercial carriers. Call (248) 693-6455 or request a manufacturing review.