Staying Safe at Home: Homeowners Insurance in Michigan
This year you may be spending more time at home than you ever have in the past. The COVID-19 pandemic has caused many people to see the true value of the safety and shelter that their homes provide for their families.
Homeowners insurance is an important investment that provides ongoing protection to you and your family. It safeguards your home in the event of losses or damages from incidents including theft, vandalism, fire, water damage, and accidents.
We’ve outlined the coverage basics, homeowners insurance in Michigan, and the factors used to determine insurance rates to help you learn how to continue protecting your home against the unexpected.
The basics of homeowners insurance
Get empowered to protect your home and family from covered losses or damages with a basic understanding of homeowners insurance.
Did you know that beyond paying for damage to your home for a covered event, homeowners insurance can also help to protect your finances, your personal belongings, the cost of alternative living arrangements, and legal expenses if needed? This includes coverage for the interior and exterior of your home, the loss or theft of possessions, and personal liability for harm that happens to others.
Dwelling, liability, and medical coverage are the primary aspects of homeowners insurance.
Your Dwelling or Home Structure coverage should equal the house’s full replacement cost, which is what it would cost for a full rebuild.
Based on your Dwelling coverage, the following limits are typically set for each of the following coverage areas:
- Other Structures: 10% of your Dwelling coverage limit
- Personal Property: 50% of your Dwelling coverage limit
- Loss of Use: 20% of your dwelling coverage
Beyond these coverage options, you can also include $1,000 to $5,000 in coverage for medical payments to others for injuries that occur on your property, regardless of who is at fault.
Liability coverage is also important. If an injury to another person or their property happens in relation to your home, you could be sued. If this happens, liability coverage protects you financially.
You’ll want to choose a coverage amount that is equal to all of your financial assets, such as your home and other investments, including automobiles and retirement accounts. The highest standard coverage is $500,000 but if you want more coverage, you can add an umbrella policy.
Claims from the national insurance company advertisements will suggest that all homeowners policies have the same coverage. Don’t be fooled by this claim, it is not just the cost of the policy that matters, but the level of coverage.
Unique aspects of home insurance coverage in Michigan that can differ from other states
Weather plays a major role in the claims made for homes in Michigan, especially in winter, where sleet, snow, and ice can cause damage to properties.
Flood insurance is important to consider in Michigan. Michigan ranked 18th in the country for flood damage claims. Floods are the most common and most costly natural disaster in the country. Flood related claims are not standard coverage causes of loss! You must purchase a separate flood policy to secure your dwelling! Coverage is expensive at times and complicated. We can Help!
It is important to note that water that enters a dwelling through windows and walls will most often be excluded from coverage. Water that enters or damages your dwelling from sewer lines, sump pumps and or drains is only covered when Sewer and Drain Cover has been added. Generally you can choose a limit of coverage from $2,500 to $100,000. Disaster clean up contractors will charge upwards of 50% more than normal contractors. So don’t skimp on added coverage.
Michigan ranks around 25th in the country for its average cost of homeowners insurance with an average rate of $2,153 per year.
Depending on where your home is located, you’ll pay lower or higher premiums in Michigan. For example, insurance policies for homes in Detroit cost an average of $2,038, while they cost $794 in Ann Arbor and $893 in Grand Rapids.
Homeowners insurance is not required by law in Michigan. However, if you have a mortgage or are trying to get a mortgage, your lender will likely require you to have homeowners insurance on the property to protect the financial investment they’re making by financing your loan.
If you own your home without a mortgage, you may also want homeowners insurance to protect your own investment.
Which factors can insurance companies use in setting rates?
Insurance companies use the underwriting process to assess your eligibility for a policy and the rate to charge you. There are several factors that can positively or negatively impact your rate.
A major factor is the likelihood that a homeowner will file an insurance claim. A history of frequent or expensive claims presents a higher risk to the insurer that will need to cover the costs of potential future claims. This is based on the claim history of the homeowner, the location, and the home’s condition.
For example, if your home has had multiple claims within the past three to seven years, it can cause your insurance premium to rise.
The following additional factors are also considered by insurance companies to determine your rate:
- Location: Conditions of the neighborhood, crime rate, storm activity, history of claims, and availability of local fire protection and law enforcement
- Condition: Older homes or homes in poor condition often require higher rates.
- Building materials: Homes built from brick or masonry often have lower premiums than those that are built with wood frames. If your home needs to be rebuilt, the cost of available building materials will also factor into your rate.
- Coverage levels: Your rate will increase in relation to the amount of coverage you choose. This includes your deductibles (the money you pay out of pocket before insurance coverage begins), added riders for valuables, and replacement cost coverage levels
- Your information: Your insurance credit score shows insurers whether you responsibly and consistently manage your assets and debt. Your claim history shows the number of claims you’ve filed and the type, such as for water damage, fire, theft, or liability.
Get the Frost and Remer advantage
As you spend this time in your home, learn about how you can best protect it. Frost & Remer can make recommendations to ensure that you have the best coverage in Michigan, with a premium you can afford.
Contact us to discuss bundles and discounts available for your homeowners insurance policy, as well as your coverage needs. Schedule a virtual appointment for your full policy review and risk assessment from Frost & Remer.