Homeowners insurance is legally referred to as "home insurance" in the state of Michigan. Laws in this state are designed to make nearly every home eligible for insurance. Michigan allows each home insurer to set its own premium rates without prior approval from the state, and there are over 100 insurers operating in Michigan as a result. The state publishes a Buyers' Guide to assist residents with their home insurance purchase needs.
Michigan law defines eligibility for home insurance as living in and renting or owning one of the following types of residences: house, condominium, cooperative unit, rented room or apartment, or a dwelling having more than one but not more than four units, such as a duplex.
Invalid Insurance Denials
If you qualify as eligible, the law states you cannot be denied home insurance solely based on the age of the home, its location, or the type of neighborhood in which it is located. Insurers are subject to penalties from the state if they deny coverage based on these reasons. It is also a violation of Michigan law for an insurer to require that a household's auto and home insurance be written by the same company.
Valid Insurance Denials
There are several valid reasons why you may be denied home insurance in Michigan. These reasons include any arson violations or claims denied due to arson within five years; more than two years' delinquency in property taxes; policy cancellation due to non-payment of premium during previous two years; using the property for dangerous or illegal purposes; condition of the home presents "extreme likelihood of a significant loss;" refusal to join a group, club or organization which is required by the insurance company; and refusal to purchase minimum required amount of insurance.
Types of Policies
"Repair cost" policies will pay to repair or replace damage using modern materials. "Replacement cost" policies will repair or replace damage using the same materials which were lost. For example, an older home with plaster walls will be restored using the same plaster (as available) with a replacement cost policy, but might be restored using drywall with a repair cost policy. Insurance companies that choose not to offer you a replacement cost policy must offer you a repair cost policy instead.
Minimum Insurance Amounts
Michigan requires the value of your property to meet a minimum threshold for insurance. As of July 1, 2008, your home must be worth at least $15,000 to purchase a repair cost policy. For a replacement cost policy, the value must be at least $35,000. Properties with values below these amounts may be ineligible for insurance under Michigan law.
- Michigan Office of Financial and Insurance Regulation: 2008 Buyers' Guide to Home & Renters Insurance
- Michigan Office of Financial and Insurance Regulation: Replacement vs. Repair Cost Policies
- Michigan Department of Energy, Labor & Economic Growth: Home Insurance Information Update
- House Insurance Rates: Michigan Homeowners Insurance Guide
- michigan map image by Vladislav Gajic from Fotolia.com