Michigan homeowners insurance, reasons you may have been denied.
Michigan homeowners insurance coverage can’t be denied under the Michigan Essential Insurance Act solely because of the age of your house, its location or the type of neighborhood you live in. However, you can be considered ineligible and denied coverage for these reasons:
- Taxes on your property are over two years past due.
- Within the past five years, you have been found guilty of a crime of arson, the use of explosives or destroying property.
- The property you want to insure is used for illegal or dangerous purposes.
- If your home has a physical condition which presents an extreme likelihood of a significant loss (such as a bad roof)
- Within the past five years, you have been denied a claim based on fraud or arson.
- You don’t want to buy the minimum coverage required for the type of policy that you want to buy.
Companies can also refuse to write new policies based on the physical condition of your property, adjacent hazards, and property vacancies. Companies may not renew policies if in the past three years there is a liability claim in which the insured was negligent, three property claims of any type totaling over $4000 ($3000 if they are not weather-related) or if the insured fails to correct a dangerous condition after being notified by the company.
If you are unable to get Michigan homeowners insurance through the regular market, you can ask a local Michigan Basic insurance agent to apply to the Michigan Basic Property Insurance Association (MBPIA). Michigan Basic was created to provide property insurance to qualified individuals who can’t get Michigan homeowners insurance with another company. If you are qualified, you can get a standard HO-2 or HO-3 policy from Michigan Basic which is the same policy as offered by a regular company.
To qualify for Michigan homeowners insurance with Michigan Basic Insurance
You need to own or rent and live in a qualified property
- “Qualified Property” means residential property which meets building code standards, is not used for farm or business reasons and is not used for illegal activities.
To determine if your property is “qualified,” MBPIA will have your property inspected (at no cost to you). If MBPIA decides that your property is not qualified, you are entitled to a written explanation of why the property does not qualify and what you need to do to make it eligible.
All MBPIA Policies are issued for one year, which can be renewed on a qualified property for the next two years without another inspection, which could be scheduled at MBPIA’s discretion. If work is required MBPIA can issue a temporary binder for up to 60 days that will insure your property while you are waiting for an inspection or make the repairs to qualify your property.
Michigan Basic Insurance offers two types of Michigan homeowners policies
- Replacement Cost Policy– This policy will allow you to replace, repair or rebuild your damaged property to its original condition, with the same kind and quality materials. That means if you have plaster walls it will be replaced with plaster walls. To purchase this type of policy, you must insure your home for an amount of insurance equal to or greater than 80% of what it would cost to replace your property.
- Repair Cost Policy-This type of policy allows you to replace, repair or rebuild your damaged property to a condition similar to what it was before the damage, using modern materials. This means that if you have plaster walls the walls, will be replaced with drywall. To buy this type of policy, you must buy an amount of insurance equal to the market value. In general, this type of policy provides less coverage than a Replacement cost policy.
To understand all the coverage’s on a Michigan homeowners insurance policy read our article Understanding Michigan Homeowners insurance.
Michigan Basic policies have to be sold through a licensed Michigan insurance agent, that works for a major insurance company, if you have been denied coverage through a regular carrier click this link to contact a local Michigan Basic agent or call 248-888-1134 to see if you are eligible for an (MBPIA) Michigan homeowners insurance policy.