Getting Licensed for Excavation Work in Michigan

[MikePhua]

Why Licensing Matters in Excavation
Excavation work involves significant risk—both physical and legal. Whether you're digging foundations, grading lots, or trenching utilities, operating without proper credentials can expose you to lawsuits, fines, and job site shutdowns. In Michigan, the licensing process is overseen by the Department of Licensing and Regulatory Affairs (LARA), which ensures contractors meet safety, insurance, and competency standards.
For contractors expanding into larger projects or working with property management firms, obtaining the correct license is not just a formality—it’s a safeguard against liability and a mark of professionalism.
Understanding Michigan’s Contractor Licensing Structure
Michigan does not issue a standalone “excavation license.” Instead, excavation falls under broader categories such as:

• Residential Builder License: Required for contractors working on residential structures, including site preparation.
  
• Maintenance & Alteration Contractor License: Includes excavation as a subcategory when tied to structural work.
  
• Commercial Contractor Registration: For firms working on non-residential projects, often requiring additional bonding and insurance.
  

If excavation is part of a larger construction scope, such as building a home or installing septic systems, you’ll likely need one of these licenses. For standalone dirt work, licensing may not be mandatory, but insurance and registration are still essential.
Steps to Get Licensed in Michigan
To become a licensed contractor in Michigan:

• Complete 60 hours of approved pre-license education covering business law, safety, and code compliance.
  
• Pass the Michigan Residential Builder or Maintenance & Alteration exam, administered by PSI Services.
  
• Submit an application to LARA, including proof of education, exam results, and a $195 fee.
  
• Provide evidence of liability insurance, typically $300,000 minimum coverage.
  
• Register your business with the Michigan Department of Treasury for tax purposes.
  

For excavation-specific work, you may also need:

• Soil erosion permits from county or municipal agencies
  
• Right-of-way permits if working near public roads
  
• Miss Dig registration, Michigan’s utility locate system
  

Insurance and Risk Management
Excavation carries high exposure to underground utility strikes, cave-ins, and property damage. Even if licensing isn’t required for a specific job, general liability insurance and workers’ compensation are non-negotiable. Many property management firms will not hire contractors without proof of coverage.
In one case, a contractor operating west of Lansing faced a potential lawsuit after a trench collapsed near a residential foundation. Though no injuries occurred, the lack of proper licensing and insurance nearly cost him the contract and led to a $12,000 out-of-pocket repair.
Scaling Up and Staying Compliant
As your business grows, consider:

• Joining trade associations like the Michigan Infrastructure & Transportation Association (MITA) for networking and updates
  
• Tracking continuing education requirements, especially if you hold a builder’s license
  
• Using digital tools to manage permits, inspections, and insurance renewals
  

Michigan’s regulatory environment is relatively straightforward, but local ordinances can vary. Always check with county building departments before starting a new project.
Conclusion
Excavation in Michigan is a high-stakes trade that demands more than just skill with a backhoe. Licensing, insurance, and regulatory compliance are essential to protect your business and reputation. Whether you're breaking ground on a new subdivision or clearing land for a commercial site, getting “right with LARA” is the first step toward building a sustainable and respected operation.